Once you've created an estate plan, it is important to keep it up to date. You will need to revisit your plan after certain key life events. The following provides a detail of the life events which would trigger the need to make any changes.
Marriage
Whether it is your first or a later marriage, you will need to update your estate plan after you get married. A spouse does not automatically become your heir once you get married. The laws of intestacy vary from state to state. In New York, without a will, trust or assets with beneficiary designations, a spouse will only get $50,000 plus one-half of the estate if you have children. You need a will or trust to spell out how much you wish your spouse to get.
Your estate plan will get more complicated if your marriage is not your first. In New York, a spouse may not be disinherited. A spouse has a right to elect the greater of $50,000 or one-third share of the estate of his or her deceased spouse. You and your new spouse need to figure out where each of you wants your assets to go when you die. If you have children from a previous marriage, this can be a difficult discussion. There is no guarantee that if you leave your assets to your new spouse, he or she will provide for your children after you are gone. There are a number of options to ensure your children are provided for, including creating a trust for your children and making your children beneficiaries of life insurance policies.
Even if you don't have children, there may be family heirlooms or mementos that you want to keep in your family.
Children
Once you have children, it is important to name a guardian for your children in your will. If you do not name someone to act as guardian, the court will choose the guardian in the event of your demise or incapacity. Because the court does not know your children like you do, the person they choose may not be ideal. In addition to naming a guardian, you may also want to set up a trust for your children so that your assets are set aside for your children when they get older.
Similarly, when your children reach adulthood, you will want to update your plan to reflect the changes. They will no longer need a guardian, and they may not need a trust. You may even want your children to act as executors or hold a power of attorney.
Divorce or Death of a Spouse
If you get divorced or your spouse dies, you will need to revisit your entire estate plan. It is likely that your spouse is named in some capacity in your estate plan - for example, as beneficiary, executor, or power of attorney. If you have a trust, you will need to make sure your spouse is no longer a trustee or beneficiary of the trust. You will also need to change the beneficiary on your retirement plans and insurance policies.
Increase or Decrease in Assets
One part of estate planning is estate tax planning. When your estate is small, you do not usually have to worry about estate taxes because only estates over a certain amount, depending on current state and federal law, are subject to estate taxes. As your estate grows, you may want to create a plan that minimizes your estate taxes. If you have a plan that focuses on tax planning, but you experience a decrease in assets, you may want to change your plan to focus on other things. In New York, estates over $1 million are subject to a New York State estate tax. Estates over $5,120,000 are subject to a federal estate tax.
Illness
It is very important to plan for unexpected illness that may require long-term care. The cost of long-term care is prohibitive but there are planning options that may be available to protect your assets. For example, long-term care insurance may be appropriate, or a Medicaid Asset Protection Trust can be created. In addition, advance directives such as a Power of Attorney, Statutory Gifts Rider and Health Care Proxy should be considered.
Other
Other reasons to have your estate plan updated could include:
- You move to another state;
- Federal or state estate tax laws have changed;
- A guardian, executor, or trustee is no longer able to serve;
- You wish to change your beneficiaries;
- A beneficiary has become disabled;
- It has been more than 5 years since the plan has been reviewed by an attorney.
Contact your elder law attorney to update your plan.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts and wills. The firm has offices in Forest Hills, Great Neck, Manhattan, Brooklyn and Cedarhurst, NY. Mr. Fatoullah is certified as an elder law attorney by the National Elder Law Foundation. He has been named a "fellow" of the National Academy of Elder Law Attorneys and is a former member of its Board of Directors. Mr. Fatoullah chairs the Legal Committee of the Alzheimer's Association, LI Chapter, and serves on its Board of Directors.
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