We recommend that our clients revisit their estate plans with an attorney every five years. Estate and tax law is always changing, and regularly reviewing your plan with an attorney will ensure that you take advantage of all favorable changes and adequately cope with unfavorable ones.
In addition to these regular five-year reviews, and the desire to change your beneficiaries of course, the following events necessitate an immediate review of your estate plan:
1. Catastrophic illness
This is the big one, especially for middle class families. If you wrote your estate plan in middle age, at your top earning capacity and in good health, with the goal of planning for sudden and unexpected death, chances are you plan does not properly prepare for an extended time of disability related to a catastrophic illness. A stroke, heart attack, diagnosis of a degenerative disease, or even a bad accident can have dramatic affects on your assets and the status of your spouse.
If you have reached the age where it is more likely you will die from a long illness, it is time to revisit your estate plan. If you or your spouse has already experienced a catastrophic illness, it is essential that you revisit that plan as soon as possible. Many estate planning techniques that make sense in middle age, like owning the family home jointly with rights of survivorship, do NOT make sense when one spouse is ill and the family needs state assistance to pay for care. By rewriting you plan with catastrophic illness in mind, you will be able to protect and preserve more of your assets both for your lifetime and for your intended beneficiaries.
When you get married, it’s time to do an estate plan, or revisit one you did in the past. In the state of Ohio, marriage does not automatically revoke a will or power of attorney executed before the marriage. This means that if you made a will leaving your property to your parents, then got married, then passed away without amending the will, your parents would inherit your property (subject to the spousal allowance). It is better to make a new will that names your spouse as beneficiary, if that is your intention, soon after marriage. Then if you do pass away suddenly, the process of passing property to your surviving spouse will be simpler, easier, and less expensive.
Children under the age of 18 cannot inherit property. If you have young children and wish to leave your property to them in the event of your death, you must find a way around that problem. Many families choose to make a will that leaves property in trust for minor children. A trust is indeed the easiest and most efficient way to protect an inheritance for a minor child. When you have children, it is the time to make sure your estate plan is properly crafted to protect their inheritance.
On the other hand, when you children grow up and reach the age of majority, an estate plan that leaves their inheritance in trust, instead of directly to them, may no longer make sense. Once all of your children reach age eighteen, we recommend revisiting your estate plan.
In the state of Ohio, divorce will automatically revoke a will to the extent that it leaves property to the now ex-spouse. If your estate plan didn’t specify an alternate taker, and you will leaves everything to the ex-spouse, divorce will essentially leave you without a will at all. There are some limited circumstances in which divorce, dissolution, or annulment will not revoke a will, but they are very narrow. Whether your intention is to leave property to or disinherit your ex-spouse, the best practice is to revise your estate plan after the end of a marriage.
5. Death of a spouse
Estate plans for married couples often look very different from estate plans for single individuals. With a married couple the common procedure is to execute reciprocal documents in which each spouse leaves all property to the other with a back-up plan in case the spouses die together. When the first spouse passes away, and all the property goes to the survivor, it is time for the survivor to revise his or her estate plan.
6. A guardian, executor, trustee, or other fiduciary is no longer able to serve
Choosing the person who will administer your estate after you pass away, or assume guardianship of your children, or act as trustee of your trust before or after your death, is a very, very important decision. Much consideration goes into choosing the people who will serve you in those ways. If the person you selected dies, becomes permanently disabled, moves out of state, or otherwise becomes unavailable to serve, it is best to choose someone new amend your estate plan right away.
7. Increase or decrease in assets, or a significant change in the character of assets
Did you write your estate plan while working for a large company and now own your own business? Did you retire, sell your business, and use the cash to buy a vacation home out of state? Did you or a family member have an accident or illness that wiped our your savings? Did you inherit a large sum of money from a relative? Big life events like these that affect the amount and nature of your assets trigger the need to revisit your estate plan.
We also recommend updating your estate plan when you permanently move to another state, or when estate tax law changes. Ohio abolished its estate tax in 2013; if your estate plan predates January 1, 2013, it might be a good idea to review it with an attorney. As always, our firm is happy to assist you in updating your estate plan after these important life events. Please understand that the information in this blog post is up-to-date as of the post date, but that the law is constantly changing. The information in this blog post is not a substitute for individualized legal advice.