Potent Reminder to Update Your Estate PlanningJul 13, 2011 / By: Pablo Palomino, Estate Planning Attorney / Category: Estate Planning, Proper Asset Ownership
Life changes as it unfolds and estate planning must reflect changes in your family, finances, and the law. It is accepted principle to update your estate planning every three to five years or earlier if you have a significant life change.
Ronald and Rianne did their original estate planning when they moved in together after college. They weren’t married at that time; so, they knew that they had no marital statutory (i.e. legal) rights. They wanted to be able to make health care decisions for each other in the event of an emergency.
At what felt like the blink of an eye, it was 11 years later and Ronald and Rianne were married with three children. One of the children has autism. Ronald has his own business as a landscaping contractor.
On a Tuesday evening, one of Ronald’s employees, while driving a company truck, falls asleep at the wheel. The truck plows into a line of cars, waiting to make the exit to the Orange County fair. A college student is killed, other drivers and passengers are injured, and there is much property damage. Lawsuits are filed.
When Ronald’s lawyer begins to investigate, he determines that all of the company trucks are in Ronald’s individual name, not the name of the landscaping business. Therefore, Ronald is personally liable for damages caused by the accident. Fortunately, all lawsuits were settled for just under one million dollars, which was the coverage on Ronald and Rianne’s umbrella liability policy.
If they didn’t have the umbrella liability policy (i.e. personal catastrophic insurance) in place, they could have lost everything.
Shaken, the grateful couple came into our office for an estate planning review and update. Updates included naming guardians for the minor children; creating a revocable living trust with provisions for their special needs child, pet, and asset protection trusts for the surviving spouse and children.
They also separated all personal and business assets and liabilities and completed a full insurance analysis, realizing that they needed additional life insurance and disability insurance to protect themselves and their children.
If your life has changed significantly since you last did your estate planning; or, it’s been more than five years since your executed your documents, be sure to consult with a qualified estate planning attorney.
Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.