Your estate plan needs to change with life events. Divorce, marriage, and having children are some of the few things that truly can affect every aspect of your life.

During such a busy and emotionally intense time Estate Planning probably will not be at the top of your priority list, but it should be, especially as these events occur.

Not taking the appropriate steps after these momentous occasions can lead to problems ranging from having the wrong person making your medical care decisions to them receiving the payout of an insurance policy.

The most pressing issues usually occur in two areas: custody/guardianship of children and asset distribution.

These any many other issues can be preempted with properly drafted Last Will & Testaments, Power of Attorney and Advance Healthcare Directive documents, and by re-titling appropriate assets.

Your first consideration is to make sure you have an estate plan and that the estate plan is up to date.

One of the most important functions of an estate plan is to name a guardian for your children in your Last Will and Testament.

If you don’t name someone to act as guardian, the court will choose the guardian. Because the court doesn’t know your children like you do, the person they choose may not be ideal.

In addition to naming a guardian, you may also want to set up a trust for your children so that your assets are set aside for them as they age.

A trust can give your spouse rights, but will authorize someone else, the trustee, the power to manage the property and protect it for the next generation.

If you have older children, a trust could, for example, provide for a younger child’s college education while helping their older sibling make the down payment on a house, and would prevent either form using their inheritance on a new Ferrari.

Another asset consideration is retirement savings.

Financial advisors generally recommend prioritizing saving for your own retirement over saving for college because students have the ability to borrow money for college while it is tougher to borrow for retirement. One advantage of being an older parent is that you may be more financially stable, making it easier to save for both.

Also, if you are retired when your children go to college, they may qualify for more financial aid. Older parents should make sure they have a high level of life insurance and extend term policies to last through the college years.

Finally, it is important to review who in, what, and how your family inherits.

As long as you were married at the time of death, your spouse will always be able to claim at least one-third of your probate assets. Even when it would contradict the terms of your will, Maryland law allows a spouse to claim one-third of the probate property if you have children, and up to half if not.

The same is true if you die without a will.  In many cases where a spouse dies intestate, their partner can make a claim on the estate.

Not re-titling bank accounts, insurance policies, etc. can also lead to unintended consequences.

Financial and insurance institutions will not care what is going on in your life, they are bound by the contracts they have on file.

If your account lists an ex-spouse as a co-owner or beneficiary of an account, that is who will own the asset upon your death.

The outcome would be very similar in cases involving your health. Unless there are extenuating circumstances, i.e. a predeceased or unavailable spouse, it is often up to a court to make medical decisions should you become unable to do so.

These potential problems may seem overwhelming due to their complexity and far-reaching consequences, but with proper estate planning, you can assure your wishes will be known and followed should the worst happen.

We encourage you to update your plans based on life events. Get started today »

Planning ahead is a gift to your loved ones!

Richard K. Abraham, Esquire

Mr. Abraham is an experienced attorney and founding member of the Law Office of Richard K. Abraham. The Sparks, MD office of the firm concentrates its practice in Estate Planning, Elder Law, Probate, Medical Assistance (Medicaid), Guardianship, Asset Preservation and Fiduciary Representation.

He is an active member in a number of professional organizations that focus on law, the senior community, and estate planning. He works with clients in Central Maryland, especially in Towson, Hunt Valley, Lutherville/Timonium, Parkville, White Marsh, Bel Air & Northern Baltimore City.

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