If you have recently purchased a new home, congratulations! This is a huge accomplishment and milestone in your life. Along with the excitement of becoming a homeowner, it’s also important to take some time to update your estate plan. Here are three key reasons why:
- You just purchased a very large asset.
For most people, their home is the biggest asset they will ever own. As such, it’s important to make sure that your estate plan reflects your wishes for what should happen to your home in the event of your death.
Many people think an estate plan is for millionaires and billionaires. People incorrectly think that they don’t need an estate plan unless their house is called an “estate” or a “manor.” However, all homes are part of your estate, and you should have a plan for all of your assets.
If you think about the home you just purchased, you probably spent hundreds of thousands of dollars. If you think about it, it is unlikely that you or most people have hundreds of thousands of dollars invested into any other single asset. If not, this makes your home the biggest asset in your portfolio, and your entire estate. Part of financial security is planning. Having a plan for your single biggest asset only makes sense.
An estate plan for your home could simply include a will. Yet, it might include a trust, or even making sure that the deed is structured in a way that it will pass outside of probate. This ensures that the people who need access to your home to live in it or sell it if you pass, will get access as quickly as possible.
- What will happen to your home if you pass away?
This is an important question to consider and discuss with your family or beneficiaries. You’ll want to have a clear plan in place so that there is no confusion or disagreement down the road.
If you pass away without an estate plan, the state will determine what happens to your home and other assets. You may not want the state making decisions about who should live in your home or what should happen to your belongings.
If you do not have an estate plan, your house very likely will get stuck in probate. It might be sold and the proceeds split amongst many of your family members. Alternatively, one of your family members might get stuck with a house with a large mortgage, or that family member may even just waive their right to the house entirely, making it go to someone you never wanted to have the house.
You can create a plan for most contingencies. However, if you don’t have a plan, you simply won’t know what will happen to your home if you pass away. You also won’t know what problems it might cause your family.
Having an estate plan is not just good for you, but it’s good for your family. Unfortunately, when we pass, our family members are grieving. Yet, we often don’t realize that death comes with a lot of legal hoops and paperwork. You can help your family and give yourself peace of mind by making a plan early.
- Every time a big event happens in your life, you should make sure your estate plan is up to date.
This includes buying a home, getting married, having children, etc. Often when people are buying a home, there are other changes happening in their life too. Buying a home is regularly due to getting a new job or growing a family. Even if you already had a will and estate plan, by regularly reviewing and updating your estate plan, you can ensure that it always reflects your current wishes and situation.
For example, you might have originally created an estate plan when you were single and had no children. However, now that you’re married and have kids, your estate plan should be updated to reflect these changes.
You might want to consider adding your spouse as a beneficiary or co-trustee. You may also want to create guardianship arrangements for your minor children in case something happens to you and your spouse.
There are many different ways to update your estate plan, and it doesn’t have to be complicated. However, it’s important to make sure that your estate plan always reflects your current wishes and situation.