There are a few common errors people make with their estate planning. One is leaving certain critical documents, such as a will, out of the plan. Others have to do with failing to update the plan. People in Virginia should review their estate plan roughly every three years, but there are also certain events or situations that should trigger a review.
People may need to update an estate plan after moving to another state since state laws can differ. It may also be necessary to take steps to update residency in another state. There could be changes in the family because of births, deaths and divorces that lead to an estate plan update. A change in a person’s assets might also result in the need to update the plan.
IRAs, 401(k)s and some other retirement plans as well as life insurance plans and other assets may use a beneficiary designation to transfer them after the owner’s death. Often, people update a will and other documents but fail to update the beneficiary designation. These should be reviewed along with the rest of the estate plan. People may also need to change an estate plan because they need to choose a different executor or trustee.
Whether a person is creating a new estate plan or reviewing an old one, talking with an attorney about goals may be helpful. For example, a person may not realize that if there is a beneficiary who is likely to be irresponsible on receiving a large lump sum inheritance, that inheritance can be placed in a trust and distributed to the heir at certain times or at a trustee’s discretion.
Source: Forbes, “7 Reasons It’s Time To Update Your Estate Plan“, Bob Carlson, Dec. 2, 2018