Many people think that they don’t need an estate plan because they don’t have an “estate”. But that’s not the case!
An “estate” is a person’s stuff – bank accounts, life insurance policies, retirement accounts, tangibles (such as jewelry, tools, books, or artwork), real estate, and family. Everyone has an estate. The size of the estate doesn’t matter – we can design a plan that fits your needs. The most important thing is that there is a plan!
That being said, there are some milestones to keep in mind when creating your first estate plan or updating an existing plan.
Having a child
The birth of a child is a wonderful, anxiety-filled time. It is perhaps the most critical time to create an estate plan or update an existing plan. A child adds the complexity of guardianship - parents have the obligation to ensure that the proper Long Term Guardians are appointed to raise their child in their stead. It is also essential to appoint Short Term Guardians so that children are never taken from your home and placed into the hands of the Department of Children and Families if you are unable to come home after an accident.
Marriage is a change in legal status that gives spouses certain rights to each other’s assets upon death. Spouses are entitled to a share of the other’s estate even if there is no estate plan in place, but these laws may not reflect the asset division that all couples want. It is common for spouses to design an estate plan together since many times their assets are jointly held and their interests are aligned. Couples should have important discussions about asset planning, including the people they would like to include or disinherit from their estate plan.
Much like marriage, divorce changes the legal status of a formerly married couple. If the couple created an estate plan together during the course of their marriage, it is critical that each party update their plan to reflect the dissolution of their marriage. Most parties do not want their former spouse inheriting their assets at their death. It is also critical to consider the terms of a separation agreement when crafting an updated estate plan to ensure that any provisions of the agreement are kept in place, such as leaving a former spouse as the beneficiary of a life insurance policy.
When a young person turns 18, they are a legal adult in the eyes of the law. That means that their parents no longer have the legal right to make financial or health care decisions for them! It is essential that young people have a Durable Power of Attorney to designate individuals to make legal and financial decisions for them if they are incapacitated and unable to make those decisions for themselves. It is crucial that these young people also have a Health Care Proxy and HIPAA Waiver to ensure that there are people available to get medical information about them in an emergency and to make medical decisions on their behalf. Without these documents, parent cannot get information about their child if they are in the hospital after an accident or other medical event. Make sure your young adults have a plan, too!