Your estate plan needs to reflect your current financial situation. If your financial status has taken a downturn due to the current economic situation or if your financial status has dramatically improved, you may need to revise your estate plan.
Since you cannot leave loved ones assets that you do not have, you may need to adjust the amount of the gifts set out in your estate planning documents.
For example, at the time Bill put his estate plan together, his estate was worth four million dollars. Of that amount, he made a bequest in his estate plan of two million dollars to his children from his first marriage and left the balance to his current wife. He set this plan up with the expectation that the remaining two million dollars would be an adequate amount for his surviving spouse to live off of for the remainder of her life. However, since his assets have lost value, his once four million dollar estate is now worth two million dollars. Under his current plan, his children would receive his entire estate and nothing would be left for the benefit of his surviving spouse.
On the other hand, if you have suddenly inherited a large sum of money or if a business venture has paid off for you, you also need to revisit your estate plan.
For example, when John and Jane set up their estate plan 25 years ago, their estate was worth about $10,000. At that time, they created simple wills leaving everything to one another and then to their baby girl, Jenna. Since then, their wealth has grown substantially. They are very philanthropically inclined and would want part of their estate to go to their favorite charity. They would also want to provide for John’s sister, who is disabled and unable to work. However, without a change to their estate planning documents, if something happened to them, John’s sister would not be provided for and their charity of choice would receive nothing.
As you can see, if your economic status has changed for the better or worse, reviewing your estate plan is critical to ensuring that your wishes are carried out and that your loved ones are provided for adequately and fairly.
For more information about Lisa S. Golshani’s services, call 661-362-0770.