Major life events that can affect estate planning goals

A person’s property plan may need to be modified at multiple points in time depending on circumstances and life changes. Before we delve into what these life-changing events are, let’s understand the basics of the concept.

The ABCs of Estate Planning: Basically, estate planning entails maintaining, managing and distributing an individual’s assets after his death or disability due to ill health. These assets can include homes, jewelry, cars, pensions, insurance policies, property, personal art collections, and any other assets of value.

The most desirable method of estate planning is to write a will or create a trust. People approach estate planning for various reasons: to preserve their family’s wealth, to make sure their dependents are taken care of, to leave a charitable legacy, etc. High Net Worth Individuals (UHNIs). A good estate plan will ensure that a person’s assets are distributed among eligible beneficiaries as intended and without any family dispute. Here, we highlight the major life events that call for a change in the scheme of the estate.

Marriage or Separation: A major task during estate planning is naming beneficiaries for bank accounts, insurance policies, wills, and other important assets. In the event of marriage or divorce, the list of these beneficiaries is likely to change. For example, if someone gets married, they are likely to want the husband’s name to be included in his property. And in the case of a second marriage, the name of the new spouse must be included. Furthermore, a person may wish to ensure that children are counted from their first marriage; This can also apply to the ex-husband, to some extent, if the separation was amicable.

Children: Having a child means a major reassessment of life’s priorities. There can be different scenarios within this category, depending on whether the child/children in question are biological, adopted, fostered or even foster children. Each of these situations must be considered in an estate plan. For example, while an adopted child is a legal heir by law, a marital child, however loved, would need to be officially named in the person’s property plan as the beneficiary.

Personal Wealth: This is especially important for the ultra-rich and wealthy who have investments in successful startups and young companies that have the potential to turn into unicorns. For them, estate planning can help reduce the impact of gift and estate taxes and protect assets from creditors during a person’s lifetime. It can also help extend this protection to selected beneficiaries and protect their inheritance from creditors and mismanagement after the death of the grantor.

Medical emergency: A medical or health emergency can affect anyone at any time. Hence, in the event of a serious health diagnosis or long-term illness, a person should review estate planning documents and assess who they would like to entrust responsibility for their financial and medical decisions in the event of future loss of mental abilities or disability. These documents must also be registered and shared with financial institutions as further evidence of the person’s wishes.

Death: Sadly you will outlive more than one intended beneficiary, successor, health care agent or trustee listed on your estate planning documents. Thus, it is important to continue to review and update your estate plans to reflect the latest developments and to remove names in the event of the death of the beneficiary.

Residential Status: A change in residential status is also an important factor that can affect a person’s property plan because it entails a change in tax status and many other financial compliance rules and regulations. Hence, in the event of permanent relocation to another country or change of citizenship status, the estate plan must be reviewed and updated to reflect all changes.

Not making an estate plan could mean that your hard-earned wealth and assets may fall into the wrong hands, leaving your loved ones in a difficult situation.

Sreepriya NS is Director and Chief Operating Officer, Entrust Family Office

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