Written by: Christopher N. McGann, Esq.

Updating your estate planning documents is something that should be done periodically throughout life. How often and to what extent depends on each person’s circumstances. There are several material changes in life that quickly come to mind when evaluating whether to update a will, including:

  • Marriage (and subsequent marriages)
  • Divorce
  • Child or grandchild born
  • Receipt of a substantial cash windfall
  • Change in tax laws
  • Desire to disinherit someone

While the above are prudent reasons to revisit your estate plan, there are other occurrences in life which may warrant sitting down and taking another look at your estate planning documents.

Deciding to live together. To make life simple, this may lead to creating joint credit or banking accounts, which carry therewith survivorship interests and responsibilities. This is likely harmless enough and may not be much of an issue in an estate administration. A potentially problematic situation could arise though if, for instance, one person promised the other, whether orally or in a separate document, that such person can “have” or “live in” their house for the rest of that person’s life. While such promises may ultimately be deemed meritless, it could nonetheless lead to litigation and deplete assets of the estate. To avoid the headaches that may ensue, it is advisable for cohabiting parties to have a candid conversation so that expectations and rights are known and are properly addressed in an estate plan.

Adopting a child is a noble and rewarding experience, both for the parent and child. Many states have statutes which explicitly provide that an adopted child is to be treated in the same manner as a natural born child for purposes of probate laws. See N.J.S.A. §3B:1-1 defining “child” to include an “adopted child”) and 20 Pa.C.S.A. §2108 (indicating an “adopted person” is to be considered the “issue of his adopting parent). While helpful to have statutory law on one’s side, checking prior estate planning documents to ensure an adopted child was not expressly excluded is advisable. Similarly, if a parent foresees a potential dispute, not only should the adopted child be mentioned by name, but there is no downside to including a statement in a document to the effect of “the term ‘my children’ as used herein explicitly includes any naturally born or adopted child of mine.”

Establishing a business venture should always lead to a contemporaneous review of estate planning documents. Generic corporate documents may be silent on what happens when a business owner dies, or simply provide such owner’s interest becomes an asset of the estate. In the complete absence of corporate documents, state probate laws govern. For instance, in New Jersey, upon the passing of the owner of a single-member LLC, the interest automatically becomes an asset of the estate. As estate assets are unprotected and subject to creditors’ claims, the intended heirs may never receive the business assets, which is obviously an undesirable outcome. Instead, care should be given to the appropriate method of succession planning.

Relatedly, going into business with other individuals should also entail a similar review. People partner up because they want to work with that individual, not that person’s spouse or child. At that juncture it is important to understand how a deceased member’s interest will be treated. Is there an annuity stream that will be payable over several years? Life insurance payment made?  Are there stock options which can be retained or are subject to certain restrictions? Or, dreadfully, would it be possible for an heir of an estate to have decision-making capabilities? Depending on the arrangement, more advanced or carefully thought out planning may be required to ensure any potential asset or liability is handled appropriately and per the actual wishes of the business owners.

Living in a blended family clearly requires careful document drafting and asset titling. Consider though, the parent who actually wants to provide for the child of their spouse. Promises can be made, beneficiary designations put in place and the child can even be included in that person’s Will. But, if the biological parent dies first, the other person can simply undo his or her estate plan and effectively renege on the promise made during the parent’s lifetime. One way around this unfortunate scenario is for each spouse to enter into a “Contract to Make a Will” (which is a ‘term of art’ and does not necessarily connote or require a separate document aside from the Will).  In New Jersey they are permitted by statute, (see N.J.S.A. 3B:1-4) and a product of caselaw in Pennsylvania (See Curry v. Estate of Thompson, 332 Pa.Super. 364 (1984)). If the requirements are met, each spouse will be held to their contractual promise and the potential disinheritance situation can be avoided.

Last – but certainly not least – consider your pet when you are creating or thinking of modifying your estate plan. Pets are part of the family too and the last thing anyone would want is for their faithful companion to wind up in a kennel, be neglected or worse. To avoid any uncertainty, consider including a provision in your Will naming the caretaker for your pet – and of course you should always let that person know in advance. Leaving an appropriate cash bequest to such person is also a good idea since pets do not come without their own expenses.

The above list is not all-inclusive and if an event ever occurs where you find yourself wondering whether you should update your estate planning documents, the answer probably is yes. Please contact one of our estate planning attorneys if we can be of any assistance in helping you with your estate planning needs.