Update your estate plan after a real estate transaction

On Behalf of | Aug 10, 2021 | Estate Planning

Most financial experts agree that individuals should review and revise their estate plans every three to five years. From changing relationships to identifying a contingent beneficiary, people should examine these documents to ensure they still match with their wishes. Additionally, any significant life event means a change is in order.

Commonly, significant life events can include a change in marital status, the birth of a child, or the sale or purchase of property. Real estate generally represents the largest financial transaction that an individual will face throughout his or her life. Whether it is buying or selling property, the individual must revise the estate plan to reflect his or her current portfolio.

Why are updates to the estate plan necessary?

A comprehensive estate plan is generally a group of documents that specify an individual’s end of life wishes. From who should make financial decisions in times of incapacity to who inherits what assets, these documents are carefully drafted. Buying or selling large assets should trigger a revision to many of these documents. Wills and trusts, for example, commonly include instructions about the distribution of the family home, business, vacation property, land and income properties.

When people add new property to their portfolio, they must be sure to assign a primary and secondary beneficiary as well. Additionally, when they sell a property, the estate plan should be updated to remove the heir to prevent any confusion in the future.

The estate plan exists to specify an individual’s end of life wishes and clarify issues that might lead to familial disputes. With a comprehensive estate plan in place, families can avoid unnecessary delays in the distribution of assets and heated debates about who gets what. Do not hesitate to update the documents of your estate plan after every significant life event to ensure the plan matches your needs.