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Does your estate plan reflect your family’s present reality?

On Behalf of | Apr 15, 2022 | Estate Planning |

We recently wrote a post that dealt with an individual’s life changes and different circumstances that could necessitate changes in an estate plan. However, your own life can remain virtually unchanged, but you still might need to reconsider the disbursement of your assets when you pass.

It could be your heirs’ and beneficiaries’ lives that changed radically. Changes are often spawned by trauma and breaches in the composition of the family unit. It is important that you remain level-headed and make sometimes difficult decisions involving your estate despite any grief or uncertainty you might be feeling during these unfortunate times. 

Let’s review some familial circumstances that could be a harbinger of estate planning changes:

A beneficiary or heir dies or is incapacitated

It goes against the natural order for parents to outlive their children or grandchildren. Yet it happens all-too-frequently. If it happens in your family, you will need to revisit the structure and division of your estate.

An heir falls on hard financial times

It can happen to anyone, given the right – or wrong – set of circumstances. If you had planned on leaving them cash or other liquid assets in a simple will, your behest could wind up in the bank accounts of your heir’s creditors. However, a trust would make that more difficult, as the principle would not be accessible to creditors, exes or plaintiffs in lawsuits.

You want to give your heirs a big tax break

If you have retirement funds invested in IRAs or 401(k)s your loved ones will inherit, they will take some heavy hits from Uncle Sam when they tap those funds. Converting the retirement accounts into Roth accounts will still incur a tax bill, but each withdrawal is free. In these uncertain economic times, that could be a big help to your heirs in the future.

By working closely with an estate planning professional, you can eliminate deficits and increase security and potentially leave a larger estate to those you leave behind.