While it is important for all people to engage in estate planning, many people make the mistake of developing a plan and then never revisiting it. People should not only assess whether their estate plan is still appropriate on a regular basis but also when certain situations arise. For example, it is generally prudent for parties who have recently received an inheritance to update their estate plan. If you inherited property and have questions regarding how it affects your estate plan, you should talk to an experienced estate planning attorney.
Updating Your Estate Plan After Receiving an Inheritance
There are multiple reasons why you should update your estate plan after receiving an inheritance. First, the inheritance is a new asset; as such, it most likely increased the value of your estate. It is important to examine whether the overall value of your estate will now trigger an inheritance tax under either state or federal law. If so, you may want to consider transferring assets prior to your death or creating a charitable trust to avoid negative tax implications for your survivors.
You should also determine how the inheritance should be distributed in the event of your death. If you have a will, you can modify it to include terms bequeathing some or all of the inheritance to your loved ones. It is critical that any modifications or codicils are properly executed and comply with the laws of your state; otherwise, they may be deemed invalid. You may also consider transferring the inheritance to a trust, either directly or through your will. Trusts help people avoid many negative tax implications and can be created for a variety of purposes. It is especially important to consider how your inheritance will be distributed if you have a blended family, as the failure to do so can result in discord between surviving family members.
Finally, reevaluating your estate plan after you receive an inheritance can help you preserve your family’s wealth. The failure to properly plan for what will happen to your estate after you die can result in negative tax consequences and increases the likelihood that your assets will not be properly managed or preserved. There are many estate planning tools people can take advantage of to ensure that their family’s wealth is not only protected but grows from one generation to the next. Estate planning can be challenging, regardless of the size of a person’s estate; it is smart, therefore, for anyone who received an inheritance to contact an experienced estate planning attorney to learn more about how they can protect their interests.
Consult a Trusted Estate Planning Attorney
Creating an estate plan is just one part of the process of ensuring your affairs are in order; you must also revisit your estate plan when notable events occur to make sure that it still aligns with your wishes. If you received an inheritance and would like to discuss how it could affect your estate plan, please contact us to schedule a consultation.