Creating an estate plan is essential to long-term planning as we age. Having your affairs in order will ensure that your wishes are carried out and that your loved ones have peace of mind in knowing your preferences. As important as having an estate plan, it is equally important to keep it updated as your life changes. Some common events should remind you to update your estate plan. The following are some examples of when to change your estate plan.
If you move to a long-term care facility
Seniors who move to senior care facilities that Medicaid pays for, such as many nursing homes, should consider the Medicaid Estate Recovery Program when updating their estate plans. The Medicaid Estate Recovery Program is a federal requirement that states collect reimbursement for the cost of benefits they paid out during the beneficiary’s lifetime, including long-term living arrangements.
Medicaid recovers its costs through the probate process from your estate after you die. If there is not enough money in your estate to cover the cost of care that you received, the program might sue your family to recover its losses. Some families may be involved in a lawsuit where the program attempts to take property like a family home and other major assets.
Seniors should also ensure that copies of their important estate planning documents, specifically a living will and an advance directive, are accessible to their senior living community. The best way to ensure all your affairs are in order is to speak to an estate planning attorney before moving into a senior living community. If you need to update these documents or create them for the first time, doing so upon moving to a senior living community is a great time.
If you move to another state
Let’s say you relocate to another state to live closer to your family members. Or perhaps you move to another state for its senior-friendly tax advantages. If you move to another state for any reason, it is time to revisit your current estate plan because probate and estate laws can vary from state to state. There may be some state-specific laws in your new location that can invalidate your current estate plan, even if the details were valid in your previous state. Examples of seemingly minor things that can negate your current estate plan include:
- Differences in the number of witnesses required for a last will and testament.
- Variations in signature requirements.
- Marital property law.
- Forms required to create a valid living will or advance health care directive.
- Who can legally serve as the executor of your last will and testament.
When there is a change in your assets
One of the primary purposes of an estate plan is to dispose of all your property after your death. You need an updated estate plan if you have an increase or decrease in your assets. So, let’s say you sell your home in order to move to a senior living community. You will need to update your will to reflect the change in your assets.
The size of your estate will determine your tax exposure. The bigger your estate, the more likely your heirs will owe estate taxes. Estate taxes vary by state. An estate planning attorney can help you understand your rights and obligations regarding estate taxes and help you potentially reduce the final estate tax bill.
After a marriage, divorce, or death
A marriage, divorce, or death are the most common life changes that require an update to your estate plan. You’ll need to update your estate plan if you are married or divorced or if a death impacts your beneficiaries. For example, a new spouse may bring you stepchildren and step-grandchildren, and you might want to include the new members of your family in your last will and testament. Also, after a divorce, you might want to ensure that your ex-spouse is no longer named as your health care agent or power of attorney. You will also likely need to make updates if someone currently a part of your estate plan passes away.
When you make changes to beneficiaries
You should update your estate plan to include any changes in your beneficiaries. As mentioned above, your family may continue to grow with time, and your estate plan should reflect those changes. In addition to family members and other heirs changing, your values might change. Perhaps you find yourself passionate about a certain charity and want to leave the organization money for support; you will need to update your estate plan to reflect this desire.
When a trustee, guardian, or executor cannot serve
People make estate plans to stay in charge of their legacies. Part of maintaining control is naming the person or people who will serve as a trustee, guardian, or executor of your estate. The person who serves in one of these roles is responsible for ensuring that your wishes are carried out after your death. It is important to choose people that you trust to accomplish this. If someone whom you previously named can no longer complete their duties in this role, it is time to update your estate plan to name someone who can.
What documents do I need to update my estate plan?
A last will and testament alone might not be enough to complete your estate plan. The instructions listed in a last will and testament do not become effective until after you pass away. Other estate planning documents that can help you manage your affairs during your lifetime include the following:
- HIPAA authorization form: HIPAA laws prevent medical providers from sharing patients’ private information without their consent. You might decide to add a HIPAA authorization form to your estate plan to allow someone you trust to speak to your health care team on your behalf.
- Revocable living trust: Revocable living trusts allow family members to avoid probate taxes by removing your property from your total estate, thus avoiding taxes. One of the greatest benefits of a revocable living trust is that it helps heirs avoid probate taxes after you die and allows you to continue to access the property placed into the trust during your lifetime.
- General durable power of attorney: A general durable power of attorney grants an agent of your choice the ability to make financial, business, and other decisions to help you manage your life as you age or if you become unable to complete these tasks on your own.
- Living will: A living will directs physicians and health care agents regarding your health care preferences if you become incapacitated and cannot communicate your desires regarding medical treatment.
- Advance directive: An advance directive is a form that instructs family, caregivers, and doctors about your desires for end-of-life care. The provisions of an advance directive are not applicable unless you are terminally ill.
Talk to an elder law attorney about estate planning
Life changes might require updates to your current estate plan. Speaking to an estate planning attorney could offer much-needed relief to you and your loved ones in a stressful situation. If you are considering updating your estate plan, contact an elder law attorney in your area with your questions and concerns.
