Estate planning in San Antonio, TX is an essential component of long term-financial planning. Estate plans consist of Last Will & Testaments and trusts, both designed to convey your wishes and bequeath your assets to the beneficiaries you designate. Beneficiaries can include family members, friends, charitable organizations, and more.
Without an estate plan, your family and other heirs may have no informed idea of what you want to do with your assets. In the worst case scenarios, your family can be left without any legal access to your assets, including cash accounts, homes, and vehicles that they need for daily living.
In addition, should you pass away intestate (without a Will), your estate enters probate. Probate is a legal process, presided over by a judge, that manages your estate. The probate process manages a number of financial tasks, such as determining if your estate owes debts and paying them if so. It will also eventually distribute your assets. But the judge will decide who receives these, and there is no guarantee that the assets will be distributed as you would have wanted. Probate is also a notoriously lengthy process, and can take a year or more to be completed.
Finally, the lack of a Will or trust specifying the wishes of a person who has passed can result in, unfortunately, unhappiness or dissension about the ultimate destination of the assets. Such an event can give rise to legal challenges among family and friends. Much of this may be avoided with an estate plan.
For those reasons, it’s highly advisable to have a Will or trust, duly witnessed and filed. But if you have beneficiaries, how often should you review who and what they are?
When To Review Estate Plan Beneficiaries
Generally, it’s prudent to review your estate plan beneficiaries every 3 to 5 years. Life happens, and it can change both your assets and how and to whom you want to leave them. The estate plan process may be about the end of life, but it is not static. It changes just as much as the rest of financial planning in San Antonio, TX.
In addition to the 3- to 5-year cycle, though, it’s highly advisable to review your estate plan beneficiaries if any of the following occur.
1. Changes in your family or family status
Multiple life events can change the composition of your family. Any marriages, remarriages, births, adoptions, divorces, illnesses, or deaths may change your beneficiaries, either by addition or by removal. In addition, these events might cause you to need to rebalance the share of assets for the existing beneficiaries.
2. Changes in plans for charitable giving
Many of us want to make plans to give to charities that further our Judeo-Christian beliefs and values. Family members, friends or specifically designed investment funds can all also be recipients of charitable funds. If your long-term financial goals for charitable giving change, it needs to be reflected in your Will.
3. Changes in your place of residence
Estates are very subject to state law. Texas, for example, is a community property state, meaning that both spouses own assets acquired during the marriage (and both are also responsible for debts incurred during the same period). But some states are common law states, where any assets you acquire during a marriage are solely yours (ditto for debts). It’s prudent to check with a financial advisor or attorney when you move to another state.
4. Changes in your net worth
Wills and trusts usually bequeath assets to specific parties, while the estate, through the executor, settles any debts outstanding. If any significant changes to your net worth occur, that can change both the assets and debts that make up net worth. If you substantially add to your assets – through, say, the sale of a home or business – it may be prudent to revisit the beneficiaries of your estate plan.
Similarly, if the amount and number of your debts rise significantly, you may need to revisit your estate plan to make sure your debts and bequeathed assets are aligned appropriately.
Note that, as we age, Federal law requires the withdrawal of required minimum distributions (RMDs) from retirement accounts. These begin in your early 70s; the exact year depends on your birth year. As time passes, RMDs can substantially change the assets in your retirement accounts, so those changes should be accounted for when your Will or trust is reviewed.
5. Changes in laws
Both the Federal government and states can and do make changes to laws that affect Wills and trusts. Estate taxes, gift taxes, and changes to charitable giving are perhaps the most common, but there are a wide range of applicable laws. Any significant change in a law affecting your Will may indicate a need to revisit your beneficiaries.
6. Deaths or incapacity of beneficiaries, executors, or trustees
The death or incapacity of a beneficiary may necessitate reviewing your estate plan. In addition, your executor (the person named to oversee the management of your Will and its provisions) and trustees (for a trust) may become incapacitated or die. If this occurs, you will need to name new individuals to fulfill these responsibilities.
7. Your incapacity
If you become incapacitated through illness, an accident, or other events, it may change your Will or trust. You may, for instance, need more of your assets to pay for care, or your incapacity may make residing in another state advisable.
It can be prudent to set up powers of attorney (POA) in case of incapacity. Generally, there are two POAs, one for healthcare decisions and one for financial decisions. These can be two separate individuals or one person with a POA for both. Note that POAs are part of a comprehensive estate plan, but separate from an actual Will or trust.
Contact PAX Financial Group Regarding Estate Planning
As Texas financial advisors, the professionals at PAX Financial Group can assist with your estate planning as part of a comprehensive financial plan. Contact us today to see how we can help you create an estate plan that meets your values, needs, and goals as part of your overall financial life.
