Estate planning is an ongoing process that often requires changes. It is likely that you’ll have to make changes and adjustments to your Will several times to reflect changes in your life. It is impossible to predict all of life’s events, and sometimes these unpredictable events can impact what you have stated in your Will.
How Can You Prepare for Changing Circumstances?
It’s difficult to have a plan for every possible circumstance, particularly for those years into the future. However, the best way to prepare, and react to changing circumstances is to regularly review your documents. This is especially true when you need to revise your listed fiduciaries or beneficiaries. For example, divorces, new marriages, deaths in the family, or births may lead to necessary changes in your Will. As you move through these big life changes, legal documents may not be the first thing on your mind. For this reason, it is good to get in the habit of reviewing those documents on a regular basis and making the necessary changes. It is worth checking your Estate documents once a year, to ensure they continue to reflect your wishes. You may not realize something has changed in your wishes, until you review your current Estate planning documents.
On the other hand, there are some circumstances that change during or after your death. In these cases, there are processes in place to address these unique situations.
Changing Circumstances: Simultaneous death
The Simultaneous Death Act is a law that goes into effect if two people who may be beneficiaries in each other’s wills die simultaneously. This act allows for families of those loved ones to avoid double administrative costs, and instead the wills are combined and their assets distributed to the listed beneficiaries faster and with less legal fees.
For this to take place, the two people have to die within 120 hours of each other. For example, if two parents die in an accident, instead of their shared assets needing to go through probate twice, they can be distributed to their heirs or other beneficiaries after their Wills have been through a combined probate process.
If for some reason you would not want the Simultaneous Death Act to go into effect if you and your spouse passed away at the same time, ensure that you include language in your Will to reflect that choice clearly.
Changing Circumstances: Estate Assets Ademption and Abatement
If you fail to account for changing circumstances in your Will before you die, it is likely that your estate will experience asset ademption or abatement. This ultimately means that your beneficiaries will not receive the assets you have set forth for them to receive.
Ademption takes place when you have listed specific property to a beneficiary, but the property is no longer in your ownership when the will goes into effect. For example, if you sell an item that you’ve included in your will and forget to account for that change, ademption will take place. This means that the beneficiary you have listed no longer has any claim over that property or any revenue you’ve accrued from it.
Similarly, abatement happens when funds that you’ve listed to give to a beneficiary in your Will are no longer available in your estate when it goes into effect. For example, if you list a dollar amount to give to a specific beneficiary, but you lost that money or part of it during your lifetime and don’t account for that, your beneficiary may receive a reduced amount–or no amount at all. This is dependent on what you do have available.
To avoid these taking place, be sure to update and review your Will and other legal documents regularly. Any changes in your financial status, a proposed Executor or Trustee passing away or moving, or an expanding family with grandchildren or great grandchildren, are reasons to consider updating your Estate documents. If you have any further questions or would like to update or change your Estate documents, please contact Ward, Shindle & Hall.