Pitfalls of Not Updating Your Estate Plan

As a new decade begins, it’s a good time to consider reviewing an existing estate plan, especially if it was prepared more than five years ago or there have been significant changes in one’s family or property, such as birth, death, marriage, separation, divorce, or the purchase of real estate or acquisition of significant financial assets. 

The laws have changed and most estate plans created a few years ago need to be reviewed and updated, to avoid unnecessary costs and hassles to the survivors or beneficiaries

Here are some examples of unintended consequences of not updating one’s plan:

  1. Birth of a child after creation of the estate plan. California law presumes that the child would have been included as a beneficiary but for the fact that they were born after the estate plan’s creation. As such, the child is entitled to inherit the share of the estate that would have gone to them had there been no will or trust, which may include both the deceased spouse’s separate property that passes outside of the will or trust and the property that passes under the will or trust, proportionately from each beneficiary’s share.
  2. After the creation of their estate plan, a married couple separates, intends to divorce, but a spouse dies before the divorce is finalized.   If the spouses did not update their estate plan, the law treats them as if they were married and any distributions made for each other’s benefit remain in effect. 
  3. A couple purchases a home, has an existing trust, but fails to transfer the home or significant financial assets into the trust before both spouses pass away.  Most real property in California and significant financial assets (with a few exceptions) outside of a trust will be subject to a usually lengthy and costly probate proceeding. The delay and costs associated with probate result in assets passing to heirs slowly and at reduced levels, because court costs and attorneys’ fees are customarily paid out of estate assets.

Take the time now to dust off your estate planning documents and make sure they reflect your current wishes regarding your family and assets.

We will review your estate plan documents without charge, and let you know if changes are needed.