Why It’s Important To Review And Update Your Estate Plan Often

When a loved one dies, the pain can be overwhelming. No matter how you were related to the deceased, you may need some time to process and mourn the loss. However, their death may inspire you to create, review and/or update your estate plan. Why is this necessary? 

Understanding The Need For An Estate Plan or Revocable Living Trust 

Most people create an estate plan or Revocable Living Trust that centers on their possible incapacitation or inevitable death. They lay out what they want to happen to their estate and who should receive what from it. However, if a person you listed as your primary beneficiary on your estate plan dies, you need to make changes to your estate plan.

If there is no secondary beneficiary listed, the gift will be canceled, and it’ll become part of the general estate and dispersed based on the Will’s other terms. If your beneficiary has offspring you want some of the inheritance to go to, a cancellation means there is no guarantee that they will get the gift.

Many states have created “anti-lapse laws” to keep this from happening. It makes sure the heirs of the passed beneficiary will get the gift(s). Each jurisdiction has its own requirements and differences, which is something to be mindful of. For example, some states may have a limit on who benefits from these laws.

As for an RLT, there are likely stated guidelines dictating what happens to gifts if the beneficiary has died.

This is why it’s imperative to update your RLT – to ensure it’s still in line with what you want. The trustee you tap will have clear guidance on how to take care of your property and accounts, which helps to manage the process and lower the chance of family members fighting each other over your assets.

Update Your Decision Makers 

When creating your estate plan, you’ll need to choose an executor or several executors to carry out your wishes on your behalf. If you chose a loved one who passed away to manage your Will or RLT, you need to tap someone else to handle your wishes. Be sure to include backup names when you first create your Will or RLT but update it anyway when your primary beneficiary passes away to keep confusion to a minimum.

Common Designated Persons In A Will or RLT

Personal Representative (Executor)

This is the person who you trust to execute your wishes in the event of your incapacitation or death. They are responsible for gathering your accounts and property, paying off debts, and giving your heirs money and property. An executor’s job is to close out your affairs, a process that can be quite tedious and laborious. Therefore, if you don’t choose another executor, if your preferred one dies before you, the probate court steps in and uses the state’s laws to tap another representative.

RLT Successor Trustee or Co-Trustee 

This trusted person will either work with you or after your death to handle, invest or disperse your RLT listed property and money. This can be done either while you are still alive or to your beneficiaries after you have died.

If your co-trustee has died, you need to look over your trust agreement to determine your next steps. It may state that you can continue being a sole trustee and name another person to step in their shoes. Or, it may lay out who will be the new co-trustee is going to be.

If your successor dies, and you are the only trustee, nothing noteworthy will change how the trust is currently taken care of. If there is no successor when you die, your beneficiaries will need to turn to the trust agreement to determine what to do next.

  • The trust may offer that a new trustee can be tapped without involving the court if a specific number of beneficiaries agree.
  • The trust may stipulate the court must approve possibly named trustees.

It all depends on how the trust is worded and what state laws say. Since a trust is revocable while you are alive, you can change provisions to reflect changes that occur.

Financial Power of Attorney Agent 

This will be the person who can conduct financial transactions for you if you are unable to. If your financial power of attorney agent passes away before you do and you have not named another person to the role, you have no one to act for you.

While the concern may or may not be immediate, you should still tap someone to be your financial power of attorney agent. If not, your family will need to petition the court so it can legally appoint someone to handle your financial affairs. This is a very tedious, costly and lengthy process and will reveal personal aspects of yourself and the family.

Medical Power of Attorney Agent 

This person is responsible for making medical decisions for you should you be unable to do so. You may be initially hesitant to designate someone because they only act when you cannot communicate for yourself. Bear in mind unexpected things can and do occur, which is why you need to designate a person for your medical power of attorney.

The last thing you want your family to do is involve probate court to assign a guardian for you to make those medical decisions. There are two reasons this can be bad:

  • The judge looks at state law to designate a person (someone you may not have wanted).
  • The person they have chosen may not have the same views you do for medical care.

Guardian of Minor Child 

Appointing a guardian for your minor child is essential, as you don’t want probate court to assume control and assign guardianship to someone you would not have wanted to raise your child. The probate court will use the state laws to determine guardianship of your child if there is no “word” from you about it.

We Will Help You With Your Estate Planning

We know that losing a loved one is tough, but when you need help with your estate planning, our Pratt Law Group attorneys are ready to assist you in the process. You can reach out to us at 972-712-1515 or 888-517-4575 and set up either a virtual or in-person appointment.

Published On: May 31st, 2021 / Categories: Pratt Law Group /