If you have already put together a will and estate planning documents, you’ve already gone a long way in terms of preparation for the future. However, do not let those documents go stale. Rather, make sure to review them at least every five years – or sooner – if you or your family recently went through any major life changes.
When reviewing your estate plan, there are a few major life changes to consider and keep in mind.
If you changed your marital status
Marriage and divorce are two reasons to update your estate plans. If you recently got married, you will want to make sure to update any beneficiary designations. However, if you recently split, by divorce or even separation, you will want to consider updating these very same designations, obtaining waivers, and/or making changes to your will or trusts. Without these updates, your spouse could end up with less – or your ex could wind up with more.
Either way, you want your last wishes to mirror your current marital situation.
If you recently became a grandparent
Many people first create estate plans after the birth of a child. This makes perfect sense, as you want to make sure your child has a legal guardian – should anything happen to you – and to set up means to financially provide for your child, too. Now that your kids are adults though, if you recently became a grandparent, you may want to revisit those estate plans.
Consider whether you want to include your grandkids as beneficiaries. Do you plan to divide any assets between your adult children and their kids? Do you want an even split among all of your grandchildren? What if their parents pass first? These are just some of the questions you will have to ask yourself and answer each time a new grandchild is born.
If your spouse passes away
Losing a spouse is an emotionally draining time and the last thing anyone wants to think about is updating estate plans. This is completely understandable. This said, at some point you will want to make sure to review your plans and change any beneficiaries that were with your spouse, along with your health care directive and power of attorney.
In Maryland, due to the marital exemption, you will not have to pay state or federal estate taxes on any property left to you by your spouse, regardless on the size of the estate. However, these assets may be taxed once you pass, if greater than the estate tax exemption amount, or if left to nieces, nephews or other “non-lineal” relatives. This is something you will want to talk with your attorney about to see what tax saving benefits may be available.