This article originally appeared on kiplinger.com.
After you’ve created your will and an estate plan, you‛ll most likely need to revisit them at key points in your life as your circumstances change.
1. You get married
Your new spouse doesn’t automatically become your chief heir. Most states give a spouse one-third or one-half of an estate. If you don’t have any children, your parents or siblings would get the rest. To leave all your property to your spouse, you‛ll need a will. You cannot disinherit a spouse without his or her consent.
If you are living with someone but are not married and you want your significant other to inherit any of your property, you need a will.
2. You become a parent
Obviously, the big question is how your children will be cared for if both you and your spouse die. Now you definitely need a will to name a guardian for your children, and you may want to also name a property manager to handle their inheritance while they are still minors.
Or consider using trusts to handle assets that would go to your children. Also execute a durable power of attorney naming your spouse or someone else to act for you in financial matters when you can’t. Durable power remains effective even if you become mentally unable to handle your own affairs.
3. You approach middle age
Your assets are growing, so tax planning could save your heirs thousands in federal estate taxes. The time to act is when you and your spouse have a combined net worth, including house, retirement plans, and insurance proceeds, that approaches the amount vulnerable to the federal estate tax ($10.9 million for couples in 2016, $5.45 million for singles). You can give an unlimited amount to your spouse tax-free, by designating it in your will or by owning all assets jointly, for example.
State estate taxes, imposed by 14 states and the District of Columbia, can also be an issue, although less so as states raise the amount that is exempt from estate taxes so wealthy retirees won‛t decamp to another state.
Update your will to reflect family births, deaths, separations, or divorces. Review guardian, trustee, and personal-representative appointments. Reevaluate the nature of specific gifts to people or groups. And recalculate how much life insurance you need.
4. You get divorced
Review absolutely everything. The people in your life are changing. So must your estate plan. You need a new will altogether because in most states a divorce automatically revokes the provisions of a will that apply to a former spouse. In some states a divorce revokes the entire will.
You’ll want to set up trusts to control the assets you plan to leave your children. And revise any living trusts to remove your former spouse as a beneficiary or trustee. Do likewise with a durable power of attorney or a living will. Plus, unless restricted by a divorce decree, change the beneficiaries on your life insurance, pensions, and IRA.
5. You remarry
You and your new spouse may have to plan for families from prior marriages and for children you have together. Consider a prenuptial agreement, should you want to keep assets separate and nullify your inheritance rights to each other‛s estates.
You’ll want to provide for your new spouse and still be certain your children are taken care of. To do this, talk to an estate-planning lawyer about a qualified terminable interest property trust—QTIP, for short. This trust can be set up in a will to give your spouse the income from the trust property and some rights to principal. But when he or she dies, the assets go to beneficiaries you have chosen.
6. You retire or move to another state
If you retire to another state (or any time you move to a new state, for that matter), have your estate-planning documents reviewed in light of that state’s laws and your current needs.
Durable powers of attorney become even more important. For example, if you are stricken with Alzheimer’s disease, you may become unable to give the required consent for financial transactions. Life insurance coverage may not be needed anymore. But if your estate faces an estate-tax liability or if your spouse is dependent on retirement income that will end with your death, consider keeping the coverage.
7. Your spouse dies
This loss can leave you emotionally vulnerable to financial mistakes. For at least several months, avoid selling your house or making other drastic changes.
Seek expert advice. There may be tax benefits to disclaiming some of your inheritance in favor of alternate beneficiaries, such as your children, if your spouse‛s estate is subject to the federal estate tax and you have enough assets of your own, including liquid assets.
You’ll need to get a new will and, if needed, a revocable living trust. Execute a new durable power of attorney and a living will (which expresses your wishes in case of an illness that leaves you permanently incapacitated). Put these in a safe place, and tell people who need to know where they are.
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