Why Your Estate Plan May Not Work the Way You Think

Unfortunately, not all estate plans work the way you think they were supposed to work. There can be a variety of reasons for this…it’s usually not just one factor. And often times, the reason they don’t work can be easily avoided if you know what is happening. If you can identify these reasons and are aware of them up front, you can avoid many of the issues when they need to work.

To get you started, here are just a few of the reasons why your plan might not be working exactly the way you think it will work. There are certainly others, but these might help start your thinking to see if these, or others, might be a part of your plan…

• The law is pretty clear about the rights of a spouse and the role they play in your estate. In most states, if there is no other legal agreement between spouses, a surviving spouse gets half of the deceased spouse's estate. If spouses divorce, the ex-spouse is automatically written out of a will. A change in marital status can, therefore, make a current estate plan useless.
• If someone who was supposed to inherit a large portion of your estate passes away, it will have an impact on your current estate plan and will require some additional language to protect your original intents.
• If an heir or beneficiary has issues or problems that didn’t exist at the time you created your plan, your current plan may not distribute the inheritance as you would have intended based on these changes.
• Having a trust as part of your estate plan is usually a great idea…but if you do not fund the plan, it may not work as you intended. In fact, it might not work at all and essentially be a worthless plan and documents.
• If you move to another state, your old estate plan might not be as effective as you thought because of a difference in the laws between the two states.

These issues, and many others, can be easily avoided with a regular review of your estate plan. From my experience, most people don’t think about reviewing their estate plans as often as they should, as was recently discussed by Wicked Local Dedham in "Five things that can derail your estate plan."

Do an “inventory of annual changes” that have occurred in your life over the past year. When you write these down you may be amazed at the number of changes that have occurred. You can send this list to your attorney and ask them to review the list and see if there may be a need to do a review of your estate plan based on the changes that have occurred. If there aren’t any changes that would affect your plan, at least you have the peace of mind it should still work the way you designed it. When there are changes that affect the way you want your wishes to be carried out, I definitely recommend having an “update meeting” to address these changes and make sure you plan does what it is you want and what it was designed to accomplish for you and your loved ones.