Why You Should Review Your Estate Plan

Make Sure Yours Isn’t Out-of-Date

Horror Stories from Out-of-Date Estate Plans  

Our clients bring us the best examples of why it’s so important to keep up your estate plan. First, it might go without saying, use a reputable law firm. It’s best to use a law firm specializing in elder law and estate planning. They will be the most up to date with the latest laws around estate planning and know the best tools to achieve your goals within the laws. A firm who does an occasional estate plan might serve your needs, or they might miss something significant and leave your loved ones with a mess. You won’t know until you’re gone and your family is left to sort things out. 

The point of estate planning and life care planning is to anticipate challenging situations and avoid them. One simple example is those people who pass away without any estate planning documents at all. Without a will, their estates go through probate. The court will, among other things, determine the appropriate debtors and heirs. Then the court will make sure the Personal Representative pays the debts and distribute the assets to the beneficiaries. It sounds simple. But it gets complicated very easily.

A Late Father’s Business: A No Plan Horror Story  

Families being made up of grieving loved ones, however, allow things to go wrong quickly. We have many examples of family division from our years in practice. A cousin who has been helping with the deceased’s business for 10 years will not receive anything for his work. The two siblings who will receive equal shares in the business have very differing opinions about their cousin and her participation in that business. This sets up a potential clash between siblings about what to do with the business. It also risks their best source of income from the business and our client’s legacy.  

Let’s add even more potential for conflict between the siblings by noting that one of the siblings and the cousin live in a house owned by their father. After probate, both siblings will own 50% of that house. One wants to sell and the other wants to continue to live there. Because they own equal shares both of their signatures are required to sell. Obviously, someone isn’t going to get what they want. And that person is going to be angry with their sibling for getting in their way.  

Let’s add another fact for even more animosity. The court decides to award most of the business to one sibling but the house is awarded by the court to the other sibling 75% to 25%. Now the sibling who doesn’t want their cousin in the business could sell the house where his sister and cousin live without their permission.   

A Young Couple Doesn’t Update Guardians for their minor children: Guardianship Fails  

You might think the horror stories that lead to conflict only come with not having an estate plan like the one above. However, estate plans that have become out-of-date can also create a disaster situation. Here’s an example. One couple came to see us soon after the birth of their second and final child. They wanted to be sure that guardianship papers were in place to dictate what happened to the children if something happened to them. They named her parents as guardians.  

A car accident happened 12 years later. Her father has since passed away and her mother has recently been diagnosed with dementia. Their children cannot be taken care of by their appointed guardians. New ones should have been named years before.  

The state will be involved in determining what happens to the children, a nightmare for any parent. Some people think that these stories are just rare estate planning horror stories attorneys tell to motivate people to pay for a plan. The chance that both parents above would be killed in an auto accident above is small. But why even run the risk? 

If you have your estate plan in place, review it every three years with your estate planning attorney. Be sure the players you list in your plan are capable of the tasks required. This is true of guardians, beneficiaries, personal representatives, trustees, and everyone else named in your documents. 

Communication Required for a Successful Estate Plan  

Successful estate plans are about more than just legal documents. There are at least two benefits that come from making sure your estate plan is up to date. The first is the peace of mind you will have knowing that your loved ones will be taken care of at a time in their lives when they most need care. The second benefit that comes from reviewing your plan every three years is communication. Use the periodic review meeting as a chance to communicate your wishes to all the players in your plan. “We went to see the attorney last week and here are the changes we made to our plan…” is a great start.  

Have the important conversations with your children and beneficiaries who play a role in a successful estate plan. Don’t forget to include the professionals on your team like your financial and tax advisors.  

Do not let your plan turn into one of the horror stories we see that tear families apart. Review your plan now and have the conversations necessary to keep everyone informed.

Further Reading on why you should keep your estate plan up to date:

How to Update Your Last Will and Testament

Take Time to Review Your Colorado Estate Plan

CNBC – Three Key Reasons Why to Keep Your Plan Updated

Kiplinger – Is Your Estate Plan Up to Date?

Two of our workshops designed to help you make sure your estate plan is up to date:

Understanding Your Estate Plan – review the basic tools and players in your plan to make sure they still meet your goals.
Life Care Planning – anticipate the common challenges in retirement and aging long before they become a problem.

Browse our upcoming workshops designed to help you make sure your estate plan stays up to date.

View upcoming Client Workshops.