Why you should keep your will or estate plan updated?
So you have a will or an estate plan. Good for you! Less than 50% of Americans have a will. And it's not just for aging adults - it is an important and big step that folks at any age should consider taking. Once you have your plans in place, it can be easy to cross it off the to do list and not think much about it again. However, it is generally recommended that you do an estate plan check up every few years, or even more often in the case of a major life event. Read below to find out why it is important to keep your will or estate plan up to date!
Reason 1: People and situations change. Depending on your situation, creating a will or an estate plan involves many parts. For example, if you have kids and something happens to you, who is appointed as guardian to care for them? Who did you name as the executor of your will? And then there are end of life issues such as a DNR (do not resuscitate order), medical power of attorney and more. It is important to review these because relationships and circumstances can change. Perhaps you want to change your executor, or you've changed your mind on how you'd like end of life issues to be handled. Reviewing allows you to make the changes you desire so you can have your wishes fulfilled.
Reason 2: Account beneficiaries need a review. Having beneficiaries for your financial accounts can ensure your money is distributed as you wish. Additionally, it can save a lot of difficult legal processes such as probate from occurring in the event that you did not designate beneficiaries. Some assets that need to be considered include life insurance policies, retirement, bank, brokerage accounts and more. It is important to note that 401(k) plans require your current spouse to be listed as the beneficiary unless they legally agree otherwise. Taking the step to name your beneficiaries is a critical one, and reviewing them to ensure you've named are still the best option.
Reason 3: You may need to consider a trust. A trust is set up typically by an attorney. A trust holds your assets on the behalf of your designated beneficiary or beneficiaries. The beneficiaries then receive the funds when and how you stipulate when setting up the trust. For example, if you have young children, you may set up the trust so that they only receive a certain amount of money each month instead of all the money at once.