Life is continually changing and there are many situations in life that turn absolutely everything around. Don’t ignore your estate plan. Planning for the future is a necessary ongoing process throughout your lifetime. The rule of thumb is to update your estate plan every 3-5 years. Many people believe that once a plan is made, they can forget about it. However, this can create all kinds of conflict for family members when you pass away.
A bit of planning on your part can prevent resentment and conflicts in your family. Let’s look at some of the issues that are most important to check on periodically to prevent family conflict. Learn the 6 causes of family conflict in estate planning
1. Updating Beneficiary Designations
If you have an IRA or 401K plans or stocks and bonds, you probably already have beneficiaries listed. However, it is common for someone to write a will that contradicts the beneficiary designations on their accounts.
It is also common to get busy and forget to update beneficiaries even if you do update your will. It is imperative to update the beneficiaries for each account every time you update your will. The will cannot automatically override the legal beneficiary designations of retirement accounts.
Let’s say you are an aunt who names your niece as a beneficiary on two retirement accounts. Ten years later, your brother has a son and you change your will to include your newest nephew. However, if your will contradicts your account beneficiary designations, you could end up with a bad situation in your family. Your brother and son could believe that your nephew is receiving a retirement account from you. But if you never changed the beneficiary on the other retirement account to show him as beneficiary, he does not inherit the account.
When your brother and son find out that the older niece legally received both accounts as an inheritance, they could expect her to share with her younger cousin. There could be arguments as a family rift grows between your two remaining siblings and their children.
By going through each retirement account and checking your beneficiary designations, you can prevent a family fallout.
2. Joint Account Holdings
If you hold a joint bank account with a child who has right-of-survivorship, the child automatically owns the entire account when you pass away regardless of what your will states.
The beneficiary designation on your account supersedes your will. Your son may or may not honor the will and split the value of the assets with his siblings.
Make sure that there are no questions about what a child should need to do to keep peace with the other siblings. In your updated estate plan, account for the fact that some jointly held accounts will belong outright to the child you share the account with when you die.
3. Buying a Home with a Child
If you and a child jointly own a home with right-of-survivorship, have you considered what is fair to any other children who will not inherit the home?
Unless you specifically require it in your will, the child who inherits the home is not required by law to sell and divide up proceeds with his siblings. A situation like this could breed resentment in your other children.
This is especially important when the value of your home has changed significantly over the years since you last updated your beneficiary designations and will.
4. Medical Directives
Part of an estate plan is usually a durable power of attorney for healthcare. This “medical power of attorney” lays out your desires for end-of-life medical directives and gives one person, as the agent, the power to make any medical decisions that you have not included in your advance directives.
Because your life experiences change so much over the years, your beliefs about what kinds of medical life-saving techniques are appropriate may have changed. If you have recently watched a beloved parent or relative pass away, you may no longer want to be resuscitated if a life-ending event occurs. Or the opposite could be true.
Your desires for a respirator may have changed in light of the covid pandemic. You may or may not desire CPR if your heart stops. Your beliefs about life-saving nutrition and hydration could have changed.
Discussing your healthcare advance directives with the agent you specify in your estate planning does not change the directive that you set forth in a medical power of attorney. Your agent by law cannot go against what your medical power of attorney states no matter what you may have discussed recently. The directives in your medical power of attorney will still apply no matter any recent ideas you may have.
If you discussed your desires recently with one child but discussed with another child 5 years before, you may have conflicting ideas floating around about what you truly desire. These ideas combined with differing wishes stated in an advance directive can spark an emotional powderkeg for families should you become incapacitated or incompetent.
5. Death in the Family
When a death occurs in a family, there can be innumerable situations that call for a revision in your retirement account beneficiaries or in your will. If your spouse is the one who is gone, you must immediately update and possibly revise your entire estate plan.
Look at beneficiaries on retirement accounts, any jointly held property or bank accounts, any trusts that you may have set up together, businesses you may have together, etc. Be sure to consult with an attorney to make sure that you have covered every area of your estate and all of your account designations.
6. Divorce in the Family
If a divorce is even a possibility, go ahead and update your plans. Do you really want a soon-to-be ex-spouse making medical decisions for you or inheriting your assets if you die?
If your child has a situation that looks like divorce is imminent, it is time to update your own estate plans. Don’t let a portion of your resources go to a child’s ex instead of to your child.
Emotional pain and divorce go hand in hand. An updated estate plan can at least account for the wishes of your family, even if there is drama from the ex and their family.
We Can Help
With the divorce rate and the continually changing medical environment we live in, it is even more important to keep your beneficiary designations, your will, and your medical directives updated. Refusing to do so puts you and your family at risk for unnecessary disagreements, difficulty interpreting wills and last wishes, and family rifts that may never heal.
See a knowledgeable estate planning attorney check up on the health of your estate plan. With years of experience seeing how important the planning is, your attorney can keep you on top of your planning process and make sure that your plans are cohesive and legally stable. Don’t let a lack of planning on your part disrupt the harmony and peace of your familial relationships.