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When and why to update your estate plan

On Behalf of | Jan 31, 2022 | Estate Planning & Probate

Many people in Texas and across the country either do not have an estate plan, or neglect the one they once began by creating a will. But even for those who have spent considerable time and expense planning for the future and the legacy they wish to leave to their loved ones after they are gone, it is possible to miss important documents or signatures.

Events take many turns in people’s lives, such as:

  • The birth of a family member
  • The loss of a family member
  • A divorce
  • A remarriage

Any of these occurrences should be cause for major revisions to the estate plan. Forgetting to make important changes that add or take off beneficiary designations, or that factor in a change in asset sources, could lead to heartache or confusion to family members who thought they were taken care of.

For Houston-area families, having assistance with asset protection and estate planning is essential, especially as it concerns the future security and well-being of your loved ones.

Making a plan, and then not sticking to it

There are many ways that estate planners accidentally sabotage their own carefully laid plans, and it often happens when they have the best interests of another in mind. An older person might include cash gifts in their will that designate money to a favorite cleaning lady, a niece, or a childhood friend, but then go ahead and give away the money while they are alive without changing the will. The surviving family members only discover the shortage in the estate after their loved one is gone, but then must watch as these beneficiaries receive their gifts once again when the will is read.

Likewise, adding a joint owner to a bank account or other property is easy to do, but not telling the family or the estate attorney about it can lead to confusion and create a deficit in the estate that will not allow the terms of the will to be fulfilled. It can also lead to will contests and courtroom battles over property.

Mistaking the size of the estate or who benefits from it

When people set up a trust, their good intentions may fall short if the estate assets decrease over time and cannot pay all the gifts to designated beneficiaries. Along with this miscalculation, it is important to know the difference between probate and non-probate assets.

Many people do not realize that the total sum of all estate assets is not the total that they can count on going into the will. Probate assets will pass to the estate and are distributed according to the terms of the will. However, joint ownership of property, such as of the family home or beneficiary designations through life insurance policies, are not part of estate assets.

As to beneficiary designations, changing one without alerting your estate attorney can also cause problems in the future. The policy might have originally gone to a trust to pay bequests or estate taxes, but once the designation changes, so does the estate plan. And a retirement account that was to go to an individual may incur unforeseen taxation if the beneficiary becomes the trust.