Estate planning is essential, but it's also unpleasant to consider. This is one of the reasons fewer than 46% of adults in the U.S. have a will. The majority are dying intestate. According to California's intestate succession laws, your closest relatives receive their assets. You need to work with an estate planning attorney in Los Angeles if you want your last wishes honored,
More young people ages 18 to 34 are creating wills and trusts than those in the older age groups of 35 to 54. The trend has been attributed to the COVID pandemic, which confronted a lot of youngsters with their mortality.
What they need to realize is that one visit to a trust lawyer in Los Angeles isn't enough. They need to regularly review their estate plans to ensure they're up-to-date with major life events.
The Top Reasons to Review Your Estate Plan in California
There are many reasons to review your life plan, including the following:
Family Changes
A 20-year-old woman's life is nothing like one in her early 30s. Her estate plan is probably simple. For instance, she might have a car that she leaves to her brother and a gaming console and games that she leaves to her young cousin.
Her circumstances change as she gets older. She might buy an apartment, get married, and start an emergency savings account. Her estate must change to reflect her new life circumstances.
Within the next three years, she and her husband adopted two children, and her brother passed away. Again, her estate plan must be reviewed with these major events in mind.
Beneficiary Updates
This includes things like life insurance policies, retirement accounts, and investments. They are separate from your estate and avoid probate. More importantly, the beneficiaries named are also separate from your estate assets.
For example, you leave your retirement account to your granddaughter in your will, but you never remove your ex-husband as the designated beneficiary. The RA will go to your ex-husband.
You must regularly review your entire estate plan to ensure the right people are designated beneficiaries.
State Law and Tax
Estate planning laws differ from state to state, so your estate planning attorney in Los Angeles, CA, needs to fully understand estate laws in California.
Estate taxes are also subject to change. For example, changes to the estate tax exemption can affect the tax benefits of irrevocable trusts and family and charitable trusts. Your estate planner must be familiar with tax law so you can reap the maximum tax benefits.
Gift taxation also changes. When the gift tax exemption amount is high, your estate planner might recommend that you make a lifetime wealth transfer to a beneficiary. It's a good idea to talk to a tax consultant to ensure you're within state laws.
Location Changes
As estate planning laws differ from state to state, you must inform your Los Angeles estate planning attorney if you plan to move. They'll make the changes necessary to ensure your will complies with the new laws.
Consult your estate planner before you move to find out how the differences affect your estate. For example, it may have different requirements for powers of attorney and revocable living trusts. It might also be mandatory for your spouse to inherit a portion of your estate. Even if you have a fractious relationship with your spouse, you can't leave your entire estate to your children.
A no-contest clause could potentially allow you to leave all assets of significance to your children and only the barest minimum to your spouse. However, the clause doesn't completely prevent unhappy beneficiaries from contesting the will in court. In California, beneficiaries or anyone disinherited can contest the will if they have probable cause.
This is not a risk-free move. If they lose the case, they lose everything that they inherited. In California, however, cases with reasonable cause protect the disgruntled beneficiary's inheritance even if they lose.
Assets Change
The number and types of assets you have change. You could buy a life insurance policy or a real estate property for rental purposes. You could sell an asset, like a motorcycle you left to your biker daughter. Your estate plan must be adjusted to reflect the changes.
Is It Time to Review Your Estate Plan?
You must review your estate plan if any of the above reasons apply to your life situation. It's best to adjust your will when the changes occur rather than wait for your next scheduled review, which could be in two years' time.
Why You Should Update Your Will and Estate Plan?
You must update your will and estate plan to ensure your assets are distributed according to your wishes. If you don't update your will, it won't include any assets you've purchased, which could lead to bitter family disputes.
As relationships change, you might want to change your child's legal guardian or your estate's executor. The change becomes necessary if your chosen guardian passes away. You don't want to leave your minor children with an uncertain future.
How Often Should You Review and Update Your Estate Plan?
Provided there haven't been any significant changes in your family, assets, or address, you should review your estate planning in California every two to three years.
The Risks of Neglecting Your Estate Plan
Neglecting your estate plan can seriously impact all aspects of your will.
- Without updating your power of attorney, you lose control over who makes medical and financial decisions if you become incapacitated.
- The courts will make decisions about your children's future if you don't update your will regarding their guardians.
- An old estate plan subjects your entire estate to probate. The probate process can be expensive, especially if it drags on for two years or more.
- An old will doesn't take the deaths of beneficiaries into account. This will affect asset distribution in ways you didn't intend.
Work with an Estate Planning Attorney to Ensure Your Last Will Is Honored
McKenzie Legal & Financial specializes in all aspects of estate planning. Our Los Angeles-based estate planning lawyers ensure your estate planning documents comply with state and federal laws.
You can rest assured that we'll work with you to make your wishes clear and protect your beneficiaries from disputes. For a consultation to evaluate your estate plans, contact us at 562-594-4200 at Thomas McKenzie & Financial today!
