The need for an estate plan is something that many Americans only recognized as important during the worst months of the Coronavirus pandemic. We generally dislike thinking about our eventual demise, but the mortality rates of COVID-19 prompted us to see matters in a different light. In April 2020, professors David Horton and Reid Weisbord, respectively of the University of California Davis and Rutgers Law School, published the results of a survey showing that 68% of Americans did not have a will or any kind of estate planning strategy in place at a time when COVID-19 contagion was at a very high level.
Passing away without a will or an estate plan throws you into what is known as intestacy, which essentially means that your assets and property will be distributed according to state law. The probate code in many states calls for an estate distribution among tax agencies, creditors, surviving spouses, and descendants. This is not an ideal situation for many families; moreover, the interests of couples who never married, and of people who live in non-traditional family structures, are seldom taken into account by intestacy laws.
Seasoned estate planning attorneys can tell you that intestacy is only one of two major problems related to probate matters in the U.S. Failing to review, update, and revise an estate plan can complicate matters at a time when you won’t be around to fix the problem. If you already have an estate plan, great…but there is also a chance that you need to revise it due to legislative changes related to taxation, probate, or trusts. Even if changing legislation hasn’t impacted your estate plan, the natural evolution of your life probably has. Please take a moment to think about the major life events you have experienced since your estate plan was created. If any of them match the situations below, this is your cue to revise your plan.
Let’s consider the joy of getting married or welcoming a baby. Think about the letdown of getting divorced, or the sorrow of losing a loved one. These are major life events that call for an immediate revision of your estate plan, particularly when they involve weddings or marriage dissolution.
Moving Across State Lines
If you moved to Alabama from another state, the only way to tell if your estate planning strategy will continue to be effective is to review it. Keep in mind that some states have specific provisions with regard to the number of witnesses who must sign legal documents, such as trusts, living wills, medical directives, and others. Likewise, if you purchase a vacation home or investment property in a state other than the one you reside in, your plan will need to be updated accordingly.
Changes in Trustee or Estate Executor Designation
Your estate plan likely names an executor, personal representative, or trustee who is responsible for carrying out your wishes, distributing your assets, and otherwise administering your estate. If something happens to your named executor or trustee—or your relationship takes a turn for the worse—you should revise your estate plan immediately.
Changes to Assets and Liabilities
Filing for bankruptcy, paying off debts, selling a home, winning the lottery, or purchasing a collectible car are all examples of financial events that can significantly change the value of your estate, thus calling for an adequate revision.
Want to learn more about estate planning and the important role it can play in your future? Feel free to contact our office with questions. You can also download a free copy of The Basics of Estate Planning in Alabama, or attend one of our upcoming free workshops.