You find yourself saying ‘I’m going to get around to that!” but somehow it’s just so hard to get around to doing some things! One such “thing” that falls into this category tends to be estate plans. You finally get around to doing it one year, but then… just like that 3 years and a new home purchase have flown by! Well, here is your encouragement to look at those documents, because just like you wouldn’t rely on an old insurance policy to protect your family today, you shouldn’t rely on an outdated estate plan to secure their future.
A prime example? Heath Ledger, the late actor best known for his iconic role as The Joker in
The Dark Knight. Ledger tragically passed away in 2008 at just 28 years old. While he was one of perhaps the few 28 year olds who had created a will (in 2003), it hadn’t been updated after the birth of his daughter, Matilda. This meant that legally, everything in his estate would have gone to the beneficiaries named in his outdated will - his parents - rather than to his young daughter. Thankfully, Ledger’s family chose to gift his entire estate to Matilda out of love and consideration for what they believed their son would have truly wanted.
But, unfortunately, not all families handle inheritance with such generosity. This real-life example emphasizes the importance of updating your estate plan after major life events to ensure that the people you want to inherit your assets actually do. You can
Learn more about Heath Ledger’s estate and his daughter Matilda here.
So, When Should You Update Your Estate Plan?
Estate planning isn’t a one-and-done task - it needs to evolve as your life does. While it’s good to create a habit of looking through these documents minimally once a year, let’s go through some of the life events that really demand that you take a look at your last will and testament, any trusts, and other legal documents.
1. Marriage or Divorce
Whether you’re saying “I do” or signing divorce papers, your estate plan needs to reflect your new reality. Many people assume their spouse will automatically inherit everything, but New York State laws don’t always guarantee this outcome if your will isn’t updated. You will want to:
- Make sure you add your spouse as a beneficiary to ensure they inherit as intended.
- Remove an ex-spouse to prevent unintended inheritance conflicts.
- Update your
power of attorney and healthcare proxies to reflect the person you trust most in case of emergencies - This particularly may no longer be an ex-spouse!
Since we were chatting about Heath Ledger previously we can refer to that situation - If Ledger had married Matilda’s mother, Michelle Williams, but never updated his estate plan, Matilda wouldn’t have been entitled to anything unless specifically named or without litigation that resulted in the will being thrown out! (By the way, the litigation route is a process with no guaranteed outcome and with all the burdens of proof being required, it’s an extremely costly and difficult and time-consuming process to even go through - whether from the person objecting to the will or the person trying to prove the will - with a Surrogate Judge making the decision).
2. Birth or Adoption of a Child or Grandchild
Welcoming a child is a huge milestone, and one that can’t be missed when it comes to estate planning. If you don’t update your estate plan, your child may not automatically inherit in the way you intend, and this could prove disastrous and difficult if both parents of that child are harmed in the same event. You should make sure that you:
- Ensure your child is named in your will or trust, as desired.
- Consider setting up a trust to control when and how they receive their inheritance (an attorney can help you consider appropriate options here).
- Nominate a legal guardian to care for them if something happens to you - Sometimes the parent or sibling that New York State would want to send your child to go live with is decidedly NOT who you would choose to care for your child!
Let’s take another look at Heath’s situation - His will was written before Matilda was born. If his family hadn’t stepped in, she wouldn’t have inherited anything at all under the original document, despite being Ledger’s only daughter.
The
American Bar Association is also a great resource if you’re looking to learn a bit more about the estate planning basics!
3. Death of a Beneficiary or Executor
Life, if nothing else, is predictably unpredictable. If someone named in your estate plan passes away, your plan needs to be adjusted to reflect this loss. A few of the things you should think about are:
- Reassigning an
executor if your chosen person has passed or is no longer able to serve. If they aren’t around at the time of your passing, who is the named alternate? Are they ready, willing and able to serve? There could be complications in this way and it’s always important to keep your will up-to-date. Ultimately, Surrogate’s Court could determine who could act as the appropriate executor on behalf of the estate. Unfortunately, as you can imagine this can lead to family disputes, delays, and additional costs.
- Update beneficiary designations so assets don’t end up in probate due to an unlisted heir, such as a deceased brother or parent.
If Ledger’s named beneficiaries had predeceased him, his estate might have been distributed under New York intestacy laws, leading to unintended consequences.
4. Significant Financial Changes
Did you recently buy a house in Williamsville? Or, perhaps open a new business in Buffalo? Receive an inheritance? You need to make sure your estate plan matches your financial situation. Here are a few things to consider:
- Speaking with your attorney to discuss if new assets need to be a part of a change in your estate plans. This can include ensuring they are considered in your will or trust.
- Consider income tax, capital gains tax and estate tax implications. This can be extremely important to plan appropriately for - as planning with tax implications in mind can mean a great difference for your loved ones.
- If you started a business, create a succession plan so your company doesn’t fall into legal limbo (this process is definitely something to chat with an attorney about, so if this is you feel free to
Contact Us!)
You can also learn more about estate and gift taxes right on the
IRS Website!
5. Moving to a Different State
This is one that often people don’t think about, but state laws can vary dramatically and therefore this is an important one!!! Estate laws vary by state. If you move to or from New York, your plan may not be valid or might require specific revisions to allow it to be valid in the new state where you reside. Here are a few things to think about:
- Where some states may, New York doesn’t recognize handwritten wills (unless in few circumstances, such as made by active military members).
- Different states have varying probate rules - Re-deciphering these rules at the actual time of probate could result in court delays and extra fees. Therefore, running these by an attorney in your current state could save your family a significant amount of time and money at the time of your probate.
- Powers of attorney may need to be redone to comply with local laws. And, local financial institutions and others will likely want to see documents that are prepared and executed in the state where the document is presented - so, “snowbirds” may need two power of attorney documents that work in conjunction with each other but are readily accepted by both Florida and New York State, as an example.
Revisiting Heath’s situation, if Ledger had moved from Australia to New York before his passing, his will may have needed revisions to comply with United States and New York State laws.
Don’t Leave It to Chance
Heath Ledger’s story reminds us of an important lesson:
life is unpredictable, and your estate plan needs to reflect your current reality. His daughter was fortunate that his family acted with generosity, but as we know, not all families get along and not all families handle inheritances the same way.
Your estate plan is one of the most important documents you’ll ever create.
Make sure it keeps up with your life!
Need to update your will or trust?
Contact Ruth P. George Law PLLC today to ensure your estate plan is current and legally sound. Visit our
Estate Planning page or schedule a consultation - we’re here to help Western New York families protect their legacies.
