For many people, estate planning is synonymous with the creation of a will. Wills are the most ubiquitous and universal estate planning documents. With one document, you can potentially leave instructions regarding the distribution of your property and the care of your dependent family members, like children.
Those creating an estate plan and those updating existing plans to better reflect their changing life circumstances will think about what to include in their will. Far too many people forget to create or look at other documents.
When it comes to the resources that your loved ones may depend on the most after your death, there could be a conflict in the paperwork if you are not careful to update everything at the same time.
How do estate planning conflicts occur?
You may draft a will and purchase a life insurance policy when you get married or become a parent. You want to have financial resources to provide for your spouse or children if anything should happen to you.
Later, if you add more children to your family or divorce your spouse, you may need to change your will so that it more closely aligns with current circumstances. If you only update your will and don’t go over the beneficiary designations for your life insurance policy and transfer on death bank accounts, the designations may directly contradict what you have written in your will.
Although you might assume that the will would have priority over the much-older life insurance and transfer on death paperwork that you executed, you would be wrong. The documents directly attached to those policies and accounts will have more authority if there is a conflict between the two.
If all you do is update the will and not the paperwork for the account or the life insurance policy, someone other than the person you intend might receive those resources when you die. Even if the courts do eventually sort things out, there will likely be expensive and stress-inducing probate litigation for your family to endure in the meantime.
Reviewing all of your documents periodically protects you
Just like you shouldn’t put off creating a will until you know you will need one soon, you don’t want to delay reviews and updates when your life situation changes. The more frequently you go back over your estate plan to make sure that it aligns with your wishes, the more effective your estate plan will be at protecting the people you love.
Many people benefit from reviewing their estate plan annually or every few years and whenever their immediate family situation or financial circumstances change. Knowing when to update your estate planning documents and how to do so effectively can help you leave behind a meaningful legacy for those who matter the most to you.