Changes to the law and significant events in your life could alter the way that you originally meant to apportion assets in your estate planning documents. The only way to ensure that your estate plan truly reflects who you are, what you care about, and what you have today is to have your documents reviewed and updated frequently.
When you decide that a particular individual is going to receive an inheritance from you, keep in mind that the matter doesn’t end there. You have to ask yourself what would happen to the resources in the event of this person’s passing. If this person does die before you, you need to be sure to update your estate plan to reflect your wishes given the new circumstances. The examples below and those in our celebrity series about Estate Planning Mistakes of Celebrities (featuring Amy Winehouse, Whitney Houston, Michael Crichton, Etta James and James Gandolfini) show why making updates when important life events happen is crucial.
Marilyn Monroe: Stranger Inherits Fortune
Most people want their assets to wind up in the hands of someone that they know and love. Initially, Marilyn Monroe took steps to make this happen by leaving most of her estate to her close friend Lee Strasberg.
Strasberg, one of the most well-respected acting teachers of all time, and his second wife Paula were reportedly like parents to Marilyn. Lee was eight years older than his wife, and women as a rule enjoy longer lifespans than men. Marilyn probably assumed that Paula would inherit the estate after Lee passed away.
In fact, an entirely different scenario materialized. Paula predeceased Lee, and he subsequently married a woman named Anna who wound up inheriting the Monroe estate after Lee’s passing.
Tens of millions were made from the sale of licensed products, all going to an individual that Marilyn did not know.
Jim Morrison: Not What He Intended
Jim Morrison of the iconic rock band The Doors was quite forthcoming about the fact that he did not care for his parents. He had no contact with them, and told people that he never wanted to resume any type of relationship.
He made his wishes clear in his Last Will and Testament. He left everything to his girlfriend Pamela Courson, assuming she lived for at least three months after Jim passed away. In his Will, he stated that he wanted his brother and sister to inherit his estate if Courson didn’t live for these three months at minimum. He did not include his parents, and he did not include Courson’s parents.
However, after Pamela Courson died without a will the state rules of intestate succession were utilized to decide who would inherit her assets. Of course these assets included the assets of Morrison’s estate.
Under these rules Courson’s parents inherited the estate. Jim Morrison’s parents were not pleased with this and they ultimately negotiated a settlement with the Coursons that allowed them to share in the ownership of the estate.
Regardless of how you feel about his lifestyle or personal decisions, Morrison was an adult in possession of considerable financial resources and royalty rights. He had the right to do what he wanted with them, and this outcome appears inconsistent with his wishes.
To avoid the same fate as the celebrities in the examples, when are updates needed? Have there been any changes in your family structure, financial circumstances, or health? The list below pinpoints certain examples of events that could have a significant impact on your estate.
• You get married or divorced
• Your spouse dies or becomes incapacitated
• You become ill or disabled
• You have a new child
• Your child marries or divorces
• Your child becomes ill or disabled
• You have a new grandchild
• One of your beneficiaries shows signs of being financially irresponsible
• One of your beneficiaries develops a drug or alcohol problem
• The value of your assets has significantly increased or decreased
• You retire or change employment
• You acquire property in a different state
• You move to a different state
• There have been changes in the law that may affect the language of your documents.
Even if no changes are necessary, you should annually sign updated Powers of Attorney. Some financial institutions won’t accept a Power of Attorney more than a year old. Similarly, the older an Advance Medical Directive is, the less likely it is that it will be honored by a doctor or hospital.
Don’t let too much time pass between reviews of your plan. There is typically no cost to a review; but the cost to your family if you neglect your plan could be disastrous. If any of these changes have happened to you or if you haven’t updated your estate plan in the last few years, the time is now. Call the Fairfax Estate Planning Firm of Evan H. Farr to update your estate plan! Ask about The Farr Law Firm’s Lifetime Protection Plan, which ensures that your documents are properly reviewed and updated as needed, so that they will have maximum effect at law.
P.S. If you don’t have an estate plan, now is the time to get started. Call us today at 703-691-1888 to set up an appointment for a consultation.
About Evan H Farr, CELA, CAP
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