Circumstances for Updating Estate Plans

By Steven J. Gibbs, Esq.

Hello Friends & Colleagues!

Updating Estate PlansI was recently chatting with a colleague who is an outstanding divorce attorney about the “revocation” of a revocable living trust following a divorce.  This reminded me of the different life changes that occur and and how they require changes to your estate plan?

By “estate plan” I am talking about your estate planning documents such as your wills, durable powers of attorney, advance medical directives and guardianship documents.  You may also have a revocable living trust as part of your plan and this is atop the list of documents that may need to be updated due to changes in circumstances.

So below are the 10 most common circumstances which are not in any order of importance and which to my knowledge most often give rise to updating your estate planning documents.

1. Divorce
In the event of divorce, a new revocable living trust is needed due to substantial changes in the estate plan.  The updated plan must recognize the changes in the estate assets as well as changes in the beneficiaries upon death and the change may require removal of the former spouse’s beneficiaries.  Also, a change in your fiduciary appointees is also often necessary due to the former spouse’s role in the estate.

2. Death of Disability of One Spouse
Often times an additional successor trustee due to the inability of the spouse to serve as successor trustee or to accommodate a change in distributions upon the surviving spouse’s death.  Often distributions that have been made due to the first spouse’s death so future distributions would not include those same beneficiaries.

3. Birth or Adoption of Children or Other Dependents
New children tend to arrive on the scene and the documents should generally be updated to reflect this joyful change in either natural birth or adoption situations.  Changes can also become an issue in the cases where grandchildren have been adopted directly by grandparents due to the adult child’s inability to care for their children.  Similarly, if there is a new adult dependent such as an elderly parent who merits consideration in the plan, the revocable trust may need to be updated to accommodate their care.

4. Relocation to a New Home State of Residence
For a new Florida resident, it is important to realize that the old estate planning documents may at best be difficult to interpret in and enforce under Florida law.  At worst, old documents may be simply unenforceable where there are attestation problems and/or witnesses cannot be located.  Forms like Durable Powers of Attorney are subject to unique state laws and should be reviewed for compliance with Florida law and in any event these documents should be updated regularly.

5. Adult Child Facing Addiction or Perilous Financial Circumstances
If an adult child would be harmed due to receiving an outright sum of money because of their personal life circumstances, there are trust options that can be adopted to protect that sum of money by holding it in trust for their benefit.

6. Changes in Your Financial Circumstances
If you win the lottery or receive an inheritance, your old estate plan may be rendered obsolete.  Substantial estate tax planning will need to be looked at to avoid a financial disaster.  If you’ve recently suffered financially, a simplified plan with new fiduciaries may be in order.

7. Changes in Asset Holdings or New Business or Investments
If you’ve started a new business venture, there will be numerous succession planning concerns that must be addressed such as who is authorized to sell or continue the business.  Another common update is to assure that your company shares have been transferred to your revocable trust.

8. Death or Disability of a Fiduciary Appointee
If your old trustee or power of attorney is no longer able to serve, this change must be made to your estate plan or your plan will not work.

9. Pet Adoption
Many retirees with empty nests now have a household that includes a lovable pet.  There are trust options available to make sure your little friend is well cared for and this may necessitate changes to your current plan.

10. Charitable Intentions
Your charitable organization of choice would need to be specifically added to your plan and it is important make this clear for all parties concerned.

Suffice to say, life changes of any nature often necessitate updates to your estate plan and it is advisable to explore what is needed at each pivotal stage of life.

As always friends, please contact us with any questions.  I hope this is helpful.
Gibbs Law Office


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