Estate plans allow people to outline their medical wishes in the event of a major emergency and their plans for their final legacy after they die. The terms people include are often very personal and prioritize the support and comfort of their closest family members.
Many people start estate planning early in adulthood and have to make occasional updates to their documents as time passes. People inevitably experience many different life events that may alter their personal responsibilities and their wishes.
Changes in marital status, adding or removing beneficiaries from the family and the acquisition of new assets can all make estate planning updates necessary. Some testators may accidentally overlook valuable resources that require individual attention when updating their estate plans. Which assets require direct adjustments rather than changes to a will or trust documents?
Transfer on death account designations
It is common for testators to make arrangements for their retirement savings or personal investment accounts to transfer to specific individuals when they die. Adding a transfer on death designation to an account helps keep specific assets out of probate court, which can reduce the risk of taxes and speed up the distribution of those resources.
The beneficiaries must provide proper identification and usually a copy of the death certificate, but they can quickly assume control over someone’s largest financial resources after their death. If someone wants to change the beneficiary who will receive an account, they need to make changes to the actual account paperwork and not just their will or trust paperwork.
Life insurance policies
Estate plans typically don’t determine what happens with insurance proceeds. Those purchasing coverage have to file special paperwork with the insurance company designating a specific beneficiary.
After a divorce or other personal changes that alter who should receive the proceeds from a life insurance policy, a testator with life insurance coverage will usually need to change the paperwork on record with the insurance company rather than simply update their estate planning documents.
Mistakes regarding what papers people should file and update can lead to surprising outcomes during estate administration. Knowing when and how to update estate planning documents is of the utmost importance for someone who wants to leave a specific legacy when they die.