How Do I Update My Estate Plan After a Major Life Event?

What Counts As a “Major Life Event?”

Certain events always require a change to the estate plan. Most notably, you want to change your plan after marriage, divorce, the death of a family member, or the birth or adoption of a family member. When these changes happen, there will be changes to how everything is distributed, and guardians may need to be named for a new family member or removed if a family member has passed away.

If a beneficiary named in the will is no longer alive, there can be a lot of complications. If a new beneficiary has been added to your family but is not reflected in the will, they can lose out. One of the worst-case scenarios is when an ex-spouse is never removed as, for example, power of attorney, and especially if a new spouse is never formally added.

But these are not the only major life changes that you need to consider. You will also want to review your plan if you have a significant financial change, such as if you inherit a lot of money or win the lottery. Review your plan if you have a significant loss in finances, too. If you start a new business, close a business that you once had, buy or sell new real estate, or move out of Texas, these are all major changes that require a review of your estate plan. You may also need to review it as your underage children come of age. If someone you had named as a guardian to a minor child passes away, you’ll need to appoint a new guardian. If you get a serious medical diagnosis, you may need to update your medical directives.

All these events affect who makes decisions, who inherits your assets, and how your assets are managed.

Steps to Update Your Texas Estate Plan

Contact a San Antonio Estate Planning Attorney

You should always talk to an attorney about your estate plan because there are many details here, and it can be easy to miss something. Your attorney will help you review all of your current documents, including your will, all powers of attorney you have set up, your medical directives, and any trusts you have established. You need to know where you stand before you can make a decision about what to do next.

Check Each Point Against Your Intentions and Goals

The next step is to check each point in your current documents to see if it matches your intentions and goals. For example, if your goal is to provide for each of your children to go to college even if you have passed away, if you have had a new child, you will want to name them as a beneficiary to a trust or establish a new trust in their name.

Identity Exactly What Needs to Change

Draft New Documents or Amend Old Ones

The number of changes you make and their nature are going to determine whether you need to draft an entirely new will or start a new trust or simply make an amendment to some of your existing documents through a codicil. Your lawyer will make sure all documents are prepared properly, notarized and witnessed so they are legally valid, and properly filed.

Key Texas Laws and Consideration

There are a number of rules here in Texas that will specifically affect the way you update an estate plan, and for this reason, you want to have an estate planning lawyer with specific experience in our state laws.

Dealing With Divorce and Separation

Texas law automatically revokes provisions in a will that favor an ex-spouse. While that might seem like it would take care of everything, there is a lot of nuance that needs to be considered. For one thing, this change has no effect upon beneficiary designations for retirement accounts or insurance policies. You may have gotten a $1 million life insurance policy intending for your spouse to use it to provide for your children after your death. But if you get divorced and never remember to change the designated beneficiary, it could all go to a bitter ex, and your children could be left with nothing.

In addition, though the law does remove your spouse as executor of your estate, beneficiary, trustee, or any other position named in the will upon divorce, the law cannot name a new person to any of these positions. You must do that, and this needs to be done quickly.

Finally, just bear in mind that even though Texas does have a law revoking these clauses, if you don’t update your will after a divorce, it is still more vulnerable to a legal challenge by an ex-spouse or other family members than it would be if you went through it with the lawyer and updated everything properly. Revising your will makes it clear what your intentions are and greatly reduce the chance that there will be disputes.

Other Laws and Concerns

Trusts allow you to put assets away during your lifetime so that they can avoid probate. But remember that if you move from one state to another, your trust must comply with the laws of that state. If you’ve recently come here from another state, talk with an attorney to make sure everything is in compliance with Texas law. In addition, your power of medical attorney and medical directives must comply with the Texas Health and Safety Code.

Then there are tax issues. While Texas does not have an estate tax, the federal government does, and laws regarding estate value and assets that are liable to the tax change regularly. Get in the habit of talking with your estate planning lawyer every year to make sure there have been no changes that might make your estate or heirs vulnerable to an enormous tax loss.

For help with estate planning, contact us today at the HGC Law Firm PLLC in San Antonio to set up a consultation.