Last post, we covered Marriage, Divorce and Remarriage. And we continue with one happy and two sad reasons…
- The Birth of a Child
Way to go!!!! Your previously simple life has forever changed (for the better) by welcoming a little bundle of joy into your family. This is worthy of updating your estate plan to provide for and plan for your child or children.
Your estate plan, after the birth of a child, goes way beyond your assets. The first order of business is to name guardians to care for your children in case something happens to you and the other parent, while your children are still minors. If you don’t, you risk having your children cared for by guardians you didn’t approve of.
Regardless of whether the child was born to you or adopted, the same rules apply. You will need to designate a guardian to care for your child as well.
You also may choose to not give directly to your children, and rather make them wait until a age or milestone in their life before they obtain control of the money. Quick question: what do you call an 18 year old who inherits $300,000.00? A broke 19 year old. Plan ahead.
- The Death of a Beneficiary
The death of a loved one is one of the hardest things you’ll experience in your life. And while dealing with it, updating your estate plan is the farthest thing from your mind, but it’s an important step that must not be forgotten.
If your beneficiary dies, you will need to ensure your estate plan still does what you wanted it to. For example, if your beneficiary had children and you want their portion to go to their children, you must specify that. You can specify that that beneficiary’s children should inherit his or her share, or that that beneficiary’s share be redistributed among other beneficiaries. There is no right or wrong, as long as you plan.
- Illness or Disability
One of the most overlooked aspects of estate planning is a future physical illness or mental disability. Who will make decisions for you if you become unable to do so? Many decisions must be made regarding your care. Setting out your desires before you become ill, disabled, or incapacitated, can save everyone heartache and headache down the road. Choosing the person to make those decisions can do so as well.
What would happen to your estate if you passed away and one of your beneficiaries was incapacitated, or unable to handle the inheritance well? Receiving money from your estate could actually harm them instead of help. It could cause him or her to be ineligible for needs-based government care programs, or if they have spending problems, it could allow their creditors to attach your estate.
Plan for these by updating your estate plan before you become incapacitated or your loved one becomes disabled or ill.
See Part 3 for the Final 4!
Thomas Babson Kane is an attorney in Glastonbury, CT, specializing in Estate Planning and Real Estate law.