Having a plan for your assets is an essential part of being prepared for anything that happens in your life, and it’s necessary for those of us who are older.Now if you are wondering about what is an estate plan and what is the purpose of an estate plan, an estate plan online is the preparation of tasks to manage a person’s asset base in the event of incapacity or death.
It refers to the transfer of assets/investments from one generation to the next. You decide how much of your estate, whether it’s property(s), a car(s), personal accolades, financial investments, or anything else, you want to pass to whom and how after your death.
Why is it Important to Keep Your Estate Planning Up To Date as Your Life Changes?
It’s essential to keep your estate plan up to date. It would help if you made sure that any changes are made in a safe place and accessible to the ones who require them. It can include updating or adding beneficiaries, changing the name of an entity, or revising the types of assets owned by an account holder.
If you’re unsure what needs updating, consider asking a lawyer or financial advisor for assistance in determining if anything is missing from your documents; this will help ensure that nothing gets overlooked when it comes time for probate of Will proceedings after death occurs, keeping in mind that the will is updated every few years; otherwise, it may become outdated before being used!
Why Should You review your estate plan?
If you already have a Digital Estate Plan in place, you are on the right track. If you do not have one, it is time to create it. And even if you have a Digital Estate Plan or an Estate Plan, you will have to review and revise it once in two to three years or after a significant life change.
If you have experienced any of the following things, you need to update your Digital Estate Plan right away.
A Walk down the Aisle
Whether you are newly married or starting your second innings, this is no doubt a major life change. We understand your responsibilities change and you might be busy settling down with your spouse. Updating your Digital Estate Plan might take the back burner. But this is also the perfect time to revise your Legacy plans and Will, Trusted Contacts, and Digital Executor list.
Splitting Up
A break in a relationship – either legal separation or divorce calls for an update on your Digital Estate Plan. For example, you might want to remove your ex-spouse as your social media Legacy Contact or change your Digital Executor.
Death in the family
The loss of a loved one can be a devastating feeling. From sudden deaths after contracting Covid19 to sudden deaths from post-Covid complications, we have seen a lot of ‘life is uncertain’ moments in the past two years.
We prepare a Digital Estate Plan to ensure our family can access and manage our Digital Assets after our demise. But what if our Legacy Contact on Facebook or our Digital Executor passes away before us? This certainly calls for an update in our Digital Estate Plan.
Illness or Incapacitation
We never know what the future beholds. We create Estate Plans and plans for Digital Estates to prepare for uncertainty. It is never pleasant to think of our death or illness. But what if we are diagnosed with a chronic illness? What if the treatment deviates us from managing our Digital Assets?
This is where Digital Estate Planning for future caregivers (your caregivers) comes into the picture. Once you create a list of your Digital Assets along with their usernames and passwords (or any other means to access them), you need to leave instructions on what should happen to them in case of death or illness. Next comes appointing a Digital Executor – choose someone who is tech-savvy and knows to work their way through your Digital Assets.
New Laws and Landscapes
The need for creating a separate plan for Digital Assets has given birth to Digital Estate Planning laws and acts. Various states in the US follow RUFADAA (Revised Uniform Fiduciary Access to Digital Assets Act). RUFADAA governs access to a person’s online accounts when the account owner dies or loses the ability to manage the accounts. To check if RUFADAA is valid in your state, have a look at the Uniform Law Commission website.
If you are a Canadian, you might want to have a look at the ULCC guidelines that govern Digital Assets in Canada. In other countries, Digital Estate Planning is still gaining traction, and it might take some time before a concrete decision is taken when it comes to accessing a deceased or incapacitated family member’s Digital Assets.
What is a Digital Estate Plan?
A digital estate plan lists all your essential online subscriptions and accounts, including usernames and passwords. It also includes an inventory of all your critical digital assets, including photos, videos, music, or even an online bank account.
A plan for digital estates gives you the freedom to access all these things from anywhere in the world without needing to travel with them physically. It could come in handy if you move away from home or have family members who may need access when they visit you. One can do this with the help of a trusted estate planning attorney or another professional in the field who understands this process. The more ready and prepared for everything you are, the better off your family will be when they need to come back after your death.
Common Reasons to Change Your Estate Planning Documents
When it comes to estate planning, the primary purpose is to ensure that your loved ones are cared for in a form that reflects your wishes and values. However, as people age or change their circumstances, they may need to adjust their estate plans. Here are some common reasons to change the estate plan:
You moved to another state
You moved to another state. If you shift to a different state, your will may not be valid in the new form. It is essential to update your documents if you’re moving to another state or transferring real property into a trust. As per the laws in the state where you are now living, your ‘will’ will be valid if you follow specific procedures.
To revise and update your will and estate planning documents, contact the court where they were initially filed and request an amendment of those documents. You may also want to hire an attorney specializing in estate planning law and trusts who can help with this process.
The objects of your affection change
You may have named your kids from a past relationship or wedding as beneficiaries in your estate plan. However, if you remarry and have a new spouse, you may have named your new spouse as the beneficiary of your assets. Likewise, suppose you have designated a specific charity as a beneficiary in your estate plan. In that case, you may have changed your mind about the type of charity or amount you would like to bequeath.
Your Assets or Liabilities Change
Some assets can be very useful in creating an estate plan: life insurance, investments, IRAs and other retirement accounts, real estate, artwork, collections, and other personal property. Others may be considered liabilities, such as a home with a mortgage, a car loan, or a significant amount of credit card debt. These assets or liabilities may have changed since you first created your estate plan.
Your qualified retirement plan is outdated
If you own an employer-sponsored retirement plan, you may not have to change anything in your estate plan. You may want to revisit your retirement plan to ensure it is still the best way to take advantage of tax breaks.
Similarly, suppose you have a retirement plan that an employer does not sponsor. In that case, you may have changed your mind about which type of account to use or the amount you should contribute each year. Finally, you may have changed jobs since you first created your estate plan. You should consult a financial advisor to ensure your investment strategy reflects your current circumstances and risk tolerance.
Executors or trustees become inappropriate
You may need to change your executor, trustee, or guardian. It is a common reason for estate planning documents to be updated and can occur when:
- The person you mentioned in your will as the executor moves away from where they live. In this case, you must include the new address in an updated copy of your choice.
- You can no longer trust your Executors, trustees, or guardians due to some unfavorable situations and instances.
- Someone else takes over as executor after you die because that person meets all requirements set forth by state law (such as being at least 18 years old).
If it turns out that one of these situations applies to you and there’s no one else who meets those requirements yet—for example, if everyone in town has already died off—you can do what’s called “succession planning” instead.
How often should you update your estate plan?
It is always recommended to update your Digital Estate Plan within a few days of a major life change. Do not postpone; it hardly takes a couple of minutes to update your Digital Executor or Legacy Contact.
Conclusion
An estate plan is essential, so the right person knows what to do when something happens. If you don’t have one, your family must go through court procedures to gain access to your assets. However, if you own an estate plan in place, and if the person dies, their children can avoid probate court altogether and take over their parent’s financial responsibilities without hassle.
If you’re unsure about your estate planning needs, we recommend speaking with a local attorney who can help you find the best solution for your situation. We at Clocr ensure to take care of all your digital assets even after you bid farewell to the world. Sign up with Clocr today to create your estate plan online and secure your digital assets.
