Estate planning is the best way to protect your loved ones from unnecessary financial burdens and ensure that your assets are distributed according to your wishes after your passing. It’s important to regularly update and change your estate plan when needed, especially during major life changes such as marriage, divorce, having children, and adopting children. This article will discuss and explain how to adjust your estate plan when major life events enter your life.
Marriage and Estate Planning
Tying the knot is more than just getting married and sharing a life together, it also means that your estate planning goals may need to go through a few changes to reflect your new life goals. Many factors of marriage could affect your current estate plan.
Beneficiary Designations and Joint Ownership: It’s common for married couples to own assets jointly and name each other as beneficiaries within their estate planning paperwork. Even though each state has different laws regarding estate, it’s important to make your wishes for each other fully known to the world through proper legal documentation. Married couples must take care to guarantee their estate plans are consistent with their beneficiary designations to make the asset distribution process easier when they pass away. This is why couples should regularly review their estate plans, such as trusts, wills, beneficiary designations, retirement accounts, life insurance, and any other account they may own jointly or separately, to reflect their wishes accurately.
Updating Wills and Trusts: Getting married is considered a major life event and will likely require updates to your trusts and will to include your new spouse and children or stepchildren. It’s smart to include instructions for how you want your assets to be inherited, appointing a legal guardian for your minor children, and any additional preferences you may have for asset distribution.
Prenuptial and Postnuptial Agreements: Prenuptial agreements may be a tricky topic for couples about to get married, but many couples choose to execute this type of agreement before tying the know. Postnuptial agreements exist for couples who have already gotten married and then realized they should have some type of agreement after the fact. Prenuptial agreements are becoming more popular as people wish to retain certain assets for themselves if they become divorced from their spouse.
Divorce and Estate Planning
Divorce can have a huge impact on your estate plan. Most people plan to stay with the person they married for the rest of their lives and make changes to the estate plans to protect their spouse. Going through a divorce will force couples to make big changes to their estate plans, including changing beneficiary designations, changing their wills, and updating their trusts.
Beneficiary Designation: The majority of people who get divorced want to change the beneficiary designations on their accounts to keep their ex-spouses from inheriting their assets. While there may be reasons for leaving your ex-spouse as your beneficiary for the benefit of the children you have together, most people update their accounts to reflect their divorce. This will help reduce unintended consequences such as an ex-spouse inheriting the assets you intended to go to someone else or even inheriting your assets after you have remarried. This can all be avoided by regularly reviewing your beneficiary designations on all accounts, such as life insurance, retirement accounts, investments, and any plans you have through your employer.
Updating Your Will: The majority of jurisdictions have laws that revoke any provisions in your will that pertain to your ex-spouse, but it is important to speak with an attorney to be sure. Reviewing and updating your will when going through a divorce is highly recommended to reflect your current wishes and avoid potential future legal issues.
Update Your Trust: Since most married people name their spouses as the beneficiary of their trust, it’s important to review your trust documents with an attorney during a divorce. You may decide to make updates to your trust document to reflect your current life situation.
Speaking with an attorney during important life changes such as marriage, divorce, and parenthood is important to ensure you make good choices regarding your estate. Life is constantly changing, and you must make sure your estate plan changes to keep up with it. An estate planning attorney can walk you through the process and take a second look at your current estate plan to strengthen it and cover any additional issues that may have presented themselves.
Progeny Law Firm assists clients with estate planning in Baton Rouge, LA. Call (225) 465-1090 or contact us online for a free consultation.
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