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Estate planning is all about ensuring your loved ones are taken care of when you're no longer here. But what happens when life throws unexpected changes your way? If your estate plan is too rigid, it may not reflect your current wishes, leaving your family with confusion, legal complications, and unnecessary stress.
At Jeffrey S. Berenholz, LLC, we emphasize the importance of keeping your estate plan adaptable to life’s inevitable changes. Here’s why flexibility is key and how you can future-proof your estate plan.
Keep Your Estate Plan Adaptable to Avoid Common Pitfalls
Many people believe the more specific their estate plan is, the better. While clarity is essential, too much rigidity can lead to unintended consequences. Here are three ways an inflexible estate plan can create problems.
1. Outdated Instructions Can Cause Confusion
Assets change over time—properties are sold, investment portfolios shift, and personal circumstances evolve. If your estate plan is too specific about asset distribution, it may not align with your financial reality at the time of your passing.
Example: If your will states that "the house at 123 Main Street" goes to your son, but you sell that house years before your death, he may receive nothing. This can lead to disputes among heirs or unintended beneficiaries receiving more than originally planned.
How to Fix It: Instead of listing specific assets, use broad terms like “my primary residence” or “the remainder of my investment portfolio” to ensure your estate plan reflects your current holdings.
2. Lack of Flexibility Can Lead to Financial Strain
Life circumstances fluctuate—your financial status, relationships, and tax laws can all shift over time. If your estate plan is too rigid, it may require constant updates, costing time and money.
Example: Suppose your estate plan designates a specific dollar amount for each beneficiary. If your financial situation changes (e.g., market downturns, unexpected expenses, or significant asset growth), your plan may overcommit your estate or leave some beneficiaries shortchanged.
How to Fix It: Instead of fixed amounts, consider leaving percentages of your estate to beneficiaries. This ensures your distributions remain proportionate to your actual assets at the time of your passing.
3. Inflexible Plans Can Lead to Legal Disputes
Overly detailed estate plans can sometimes create more problems than they solve. If beneficiaries interpret your instructions differently or feel left out, disputes can arise, leading to costly legal battles.
Example: A trust that specifies distributions at exact ages—such as 25, 30, and 35—may not account for unforeseen circumstances. If a beneficiary experiences financial hardship, medical issues, or life changes, they may be left without necessary support.
How to Fix It: A discretionary trust allows a trustee to manage funds in a way that best serves the beneficiary’s needs, rather than adhering to a rigid timeline. This ensures assets are used wisely while still protecting beneficiaries from poor financial decisions.
Regularly Review and Update Your Estate Plan
An estate plan is not a “set-it-and-forget-it” document. Life events such as marriages, births, divorces, relocations, or significant financial changes all warrant a review of your plan. At Jeffrey S. Berenholz, LLC, we recommend reviewing your estate plan at least every three years to ensure it aligns with your current circumstances.
How to Keep Your Estate Plan Adaptable
Use broad, flexible language when describing assets
Opt for percentages instead of fixed amounts for distributions
Incorporate discretionary trusts to allow for adaptable financial management
Regularly review and update your plan to reflect life changes
We Can Help!
Your estate plan should evolve as your life does. At Jeffrey S. Berenholz, LLC, we specialize in creating customized, adaptable estate plans that grow with you. Whether you need to start from scratch or revise an existing plan, we’re here to guide you every step of the way.
Start with a Peace of Mind Planning Session
Normally $450, but mention this article and we’ll waive the fee!
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