An estate plan ensures that your assets go where you plan after passing, reducing the gray area present for beneficiaries and loved ones. As your life and financial circumstances change, you should be updating and reviewing your estate plan to ensure it aligns with your life and current legal requirements. Being proactive in reviewing your estate plan allows you to have peace of mind that your financial affairs are taken care of.
When Should You Review?
So, when is the best time to review your estate plan? Any time you go through major life changes such as selling your home, buying a car, marriage changes, and similar significant events. You want to ensure that your estate plan reflects your current life at any given moment, thus the importance of scheduling routine reviews with a financial advisor.
Account for Financial Changes
Much like the rest of life, your financial status is not stagnant and will evolve over time. Assets play a major role in your estate plan, but so do liabilities like mortgages and debts. Try to maintain an estate plan that ensures beneficiaries are compensated without passing on too many financial obligations. Your estate plan should remain adaptable to life’s highs and lows, accounting for changes at any time. A high could be investing successfully, which would grow your estate, whereas a low could be taking on significant debt. No matter the financial situation you find yourself in, high or low, a review of your estate plan is always the best way to ensure your wealth and assets are in good standing.
Adapting to Family Changes
Your family is always changing, whether it be with new members entering your family or family members passing or divorcing. It is very important that you adapt your estate plans for these changes. Some common family dynamic changes that could affect your estate planning include marriages, divorces, births or adoptions, and even, in some cases, estrangements. As family dynamics change, you should be updating your beneficiaries, guardianship arrangements, and even your distribution of assets.
How to Approach Estate Plan Reviews
Know that when you approach reviewing your estate plan, it does not have to be intimidating. When a strategic approach is taken, the process is much easier than you may think. Connect with a trusted financial advisor that has the knowledge and experience to help you create an estate plan that works for your needs and goals. Stay aware of major life changes, and plan ahead to adapt your estate plan in real time.
Your strategic approach will consist of multiple steps, so keep it simple. Create an inventory check of all your assets and liabilities. Tangible assets are possessions you can see, touch, and use, such as vehicles, jewelry, art, homes, and any similar assets. Intangible assets should also be considered and include bank accounts, retirement accounts, life insurance plans, and any other non-physical assets. Debts are an example of an intangible liability. Once you have your checklist of assets, consider who in your family or close inner circle you would like certain assets to go to. For example, you may want your house to go to any children you may have and your car to a sibling. Where young kids and pets are involved, it is crucial that you make guardianship arrangements for them to ensure they are taken care of in the event of your passing.
Educate Yourself on the Legal Aspects
Estate planning requires careful consideration of the law and what makes documents legally binding. Stay well-informed on the requirements and opportunities present when estate planning and prevent potential disputes and tax challenges before they arise. Being aware of the state tax requirements and laws in your state allows you to ensure your assets are passed on as efficiently and pain-freely as possible for your loved ones. Once again, this is where the guidance of a financial planning professional, such as the Davis Wealth Management team, can be an invaluable asset. Working with a dedicated financial advisor, you can design an estate plan that safeguards your assets, minimizes tax liabilities, and takes care of the “what nows.”
About Davis Wealth Management
Davis Wealth Management is a pre-retirement and retirement planning and education organization that has grown to be a multi-fiduciary advisory company that provides an array of financial services. Our team is committed to empowering you with the tools to identify and achieve your financial goals and provide you with a more confident retirement. To get started on a more secure financial future, visit daviswealthmgmt.com or call (603) 715-2335.