Update Your Estate Plan When your Finances Change

by | Dec 1, 2015 | With Your Family in Mind

 In the recent economic downturn, many homes lost considerable value and stock portfolios gyrated.  If this is the case for you, then you should consider reviewing your estate plan.
If your will or trust divides your estate into percentages for beneficiaries, then changes in value won’t affect the proportions by which your estate is distributed.  However, if you have included specific bequests in your will or trust, then a rise or fall in your net worth could have significant consequences. For example, if your estate plan gives $50,000 to your favorite charity and the rest of your estate to your children, a reduction in the value of your estate could mean your children would not receive as much as you intended.
A change in the value of your assets could also affect your estate plan if you intend to treat your children equally by giving them assets of equal value. For example, suppose a person’s trust gives a house worth $300,000 to a daughter and a stock portfolio worth $300,000 to a son. If the value of either the house or the portfolio increases or decreases significantly in value, the children will no longer receive equal gifts.
I always encourage clients to make distributions to their charities and/or beneficiaries under a “percentage” analysis so that changes in the value of the entire estate will not necessitate the client incurring further legal fees in equalizing distributions of their estate.
Ms. MacDonald’s practice is limited to Estate Planning, Probate and Trust Administration.  Ms. MacDonald maintains her practice in the Santa Clarita Valley at 25115 Avenue Stanford, Suite A-209 in Valencia, California.  She can be reached at 661-294-6464.

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