When Is It Time to Update Your Estate Planning?

For many people, it can seem like no time is a good time to take the steps necessary to update their estate planning, or even to take the initial estate planning steps. Between work, family and kids, uncertainty about the future and specifically your finances and the economy as a whole, and the simple fact that that many people would rather focus on the present than a future after their passing, even people who intend to take the estate planning steps to provide for their loved ones can often put it off. In one sense, because we simply cannot know when our lives might come to an end, there is an inherent risk in putting off estate planning til tomorrow when it can be done today, but at the same time there are a number of times when it is especially important to update your estate planning.

At the End of the Calendar Year or Tax Year

One of the more fundamental ways in which estate planning can help you retain wealth for your beneficiaries is through tax reduction or avoidance, whether with regard to the estate tax, gift tax, capital gains and dividends taxes, or ordinary income taxes. Certain estate planning tools can assist with regard to tax planning, and timing these tools to take effect in conjunction with the end of a calendar year or tax year can have important financial consequences.

After a Marriage or a Divorce in the Family

Whether it is you getting married or a beneficiary entering into a marriage, there is now another person who might be affected by your estate planning, and you may want to take steps to specifically provide for this person or take a different approach to what this person should inherit, if anything, as the case may be. Note that state probate law may override your stated interests unless proper estate planning steps are taken. Similarly with a divorce, you may need to update your estate planning documents to reflect your current wishes.
After an Adoption, Birth, or Other Addition to Your “Family”
As with a divorce, state probate code will often dictate what a new child or adopted child will receive upon your death if you fail to update your estate planning to reflect your actual goals. And the word “family” is put in quotations to reflect the fact that an important person may come into your life who is not family by biology or marriage but who you would like to include in your estate planning.

When You Acquire, Transfer, or Dispose of Important/Valuable Property

Your estate planning might include both “specific” and “general” bequests of property. A specific bequest relates to a specific piece of property in your estate such as a car or a house or a stock portfolio, whereas a general bequest refers to money that can come from a variety of sources. When you dispose of or transfer specific property that you had bequeathed in your estate planning documents, you will want to update those documents to make sure your beneficiary is still provided for. Conversely, if you acquire new property, you may want to update your documents to indicate what person should receive that property.

When a New Estate Planning Goal Arises

Let’s say your granddaughter tells you she plans to go to medical school one day. You may consider setting up a trust to help her in that endeavor. Let’s say that same granddaughter tells you she intends to take any inheritance she receives and give it to her deadbeat boyfriend to finance his drug habit. You may consider setting up a trust that will provide her money only for educational purposes to avoid the money being wasted or used for destructive purposes.

See What a Pasadena Estate Planning Attorney Can Do For You

Christopher B. Johnson is an estate planning attorney in Pasadena, CA who has helped thousands of individuals and families over the past 18 years in creating and reaching their estate planning objectives. Schedule a consultation with him today to discuss your estate planning goals.