One question we often get from both past and prospective clients is: “Do I need to update my estate plan if I purchase a home or a property?”
Most clients want to avoid the lengthy and frustrating probate process when it comes to distributing their assets to their beneficiaries. In order to avoid probate, clients need to create a trust-based estate plan which typically involves establishing a revocable living trust. Any houses, cabins, or assets owned by the clients are then transferred to the trust.
Purchasing a new asset with a deed means the estate plan needs to be reviewed. The new piece of property, if not already purchased in the name of the trust, should be deeded to the trust so that if you pass away, the deed to that piece of property is not listed under your own personal name. If you pass away with real estate in your personal name, that property will need to go through the probate process. Probate can be avoided if the home or other real property is properly transferred to the trust.
This process applies to any newly acquired piece of property with a deed, so the estate plan does what it’s intended to do: avoid probate.
When Should I Update My Estate Plan?
Aside from purchasing or selling a property, it is highly recommended that an estate plan is reviewed every 3 to 5 years and after significant life events such as the following:
- Changes to marital status
- New addition in the family
- Adding or removing beneficiaries
- Fiduciaries name in the plan moving or passing away
- Moving to another state
- Tax law changes
Keeping your estate plan up-to-date ensures that your wishes will be carried out exactly when you pass away, and your beneficiaries will receive their portion of the assets properly without having to undergo the frustrating probate process.
Conclusion
Creating an estate plan isn’t a one-and-done process. It needs to be updated from time to time to make sure it still functions as you want it to. When people buy and sell homes and other properties, it’s a good idea to review their estate plan.
If you are interested in creating an estate plan or if you already have one that needs to be updated, give us a call. We can walk you through the process and you can enjoy the peace of mind knowing that your affairs are in order.
