One of the primary reasons for planning your estate is to make sure that your assets go where you want them to after you’ve passed away. If you’re a parent, it’s likely that you’ll want to use your estate plan to make sure your children are provided for. Many people choose to use their Will or their Living Trust to leave a lasting legacy to a favorite nonprofit or charitable cause.
If you’re not careful, though, you can end up with an estate plan that is short-sighted. It is easy to plan your estate based only on your current circumstances but, as the old saying goes, “change is the only constant.” Since none of us has a crystal ball, establishing a plan that accommodates future changes can be a tricky undertaking.
For example, let’s take a look at the estate plan of Anne and Peter, a forty-something couple with two children. Their son, James, is ten years old and his favorite place in the world is the family’s beach house. Every year, he brings a friend along with him on the family beach vacation… it never fails to be the highlight of his year. Their daughter, Emily, on the other hand, is happiest at the family’s suburban home. She is thirteen, and, unlike many girls her age, she is not a fan of the beach. She has always stayed close to the nest, and likes to be at home where her friends are near.
Considering their children’s personalities and preferences, Anne and Peter decide that ultimately they’ll leave the beach house to James, and the family home to Emily. After all, the two properties have about the same value, and this division of assets seems to best suit their children.
Fast-forward twenty years, though, and the picture looks a little different. Emily and James are all grown up. Emily is married with two children of her own, and her young family considers the beach house their home away from home. They’ve spent countless hours there, making memories. James, on the other hand, is a world traveler. He makes it home to visit his parents once a year, and he hasn’t been to the beach house in a decade. To further complicate things, the two properties are no longer the same value. The beach house is now worth about twice as much as the family home.
When you are planning your estate, it is important to remember that circumstances rarely stay the same over long periods of time. A plan that worked for your family when the kids were little may very well be obsolete by the time they’ve started families of their own. This is why it’s important to ensure that you build flexibility into your plan. For example, rather than stating simply that Emily was to inherit the family home and James was to inherit the beach house, Anne and Peter could have created a plan dividing their assets equally between Emily and James. However, Emily could be given the option to buy the family home and James could be given the option to buy the beach house. This is one example of how an estate plan can be given some wiggle room to accommodate changed circumstances.
Even without a crystal ball, a qualified estate planning attorney can help you put a plan in place that can adapt to change and serve your family through the years.