If you’ve recently undergone major renovations on your home, it’s important to remember to also update your estate plan to reflect any changes in your assets. This is especially important if you live in Washington, where an estate qualifies as a ‘small estate‘ when the decedent has less than $100,000 in assets. Keep reading to learn more about updating your estate plan after renovations.
Home Value
There are several reasons why you should consider updating your estate plan after making significant renovations to your home. First and foremost, the value of your home may have increased as a result of the renovations. For example, painting the interior of a home can result in a 107% return on investment (ROI), and painting the exterior leads to a 55% ROI. If you’ve made other renovations that have also increased the value of your home, it’s important to account for this change in value in your estate plan.
Renovations
It’s also important to consider how the renovations may have changed the function of your home. If you’ve converted a room into a home office, for example, you may want to consider updating your estate plan to reflect this change in the event that you pass away.
If you’re like many homeowners, you may have spent a significant amount of money on your home renovations. According to recent statistics, about 22% of homeowners will spend between $5,000 and $15,000 on home improvement projects. If you’ve spent a large amount of money on renovations, it’s important to update your estate plan to reflect this expenditure.
Updating your estate plan after major home renovations may seem like a daunting task, but it’s important to ensure that your assets are distributed according to your wishes in the event of your passing. Here are some steps you can take to update your estate plan after major home renovations.
Consult With an Estate Planning Attorney
An experienced estate planning attorney can help you navigate the process of updating your estate plan and ensure that all of your assets are accounted for.
Update Your Will
If you have a will, make sure to update it to reflect any changes in your assets as a result of the renovations.
Review Your Beneficiary Designations
If you have any assets with beneficiary designations, such as a life insurance policy or a retirement account, make sure to review these designations and update them if necessary.
Create Or Update Your Power of Attorney
A power of attorney allows you to appoint someone to make financial and legal decisions on your behalf in the event that you become incapacitated. If you don’t already have a power of attorney in place, consider creating one. If you already have a power of attorney, make sure to update it to reflect any changes in your assets.
Other Items to Consider
In addition to the steps outlined above, there are a few other things you should consider when updating your estate plan after major home renovations.
First, consider whether you need to update your living trust. A living trust is a legal document that allows you to transfer ownership of your assets to a trustee during your lifetime. The trustee is then responsible for managing and distributing these assets according to your wishes upon your passing. If you have a living trust in place and you’ve made significant renovations to your home, you may need to update the trust to reflect these changes.
You should also consider whether you need to update your healthcare directive. A healthcare directive, also known as a living will, allows you to specify your healthcare wishes in the event that you become incapacitated. If you’ve made significant renovations to your home, you may want to consider updating your healthcare directive to reflect any changes in the layout or accessibility of your home.
Updating your estate plan after major home renovations may seem like a daunting task, but it’s an important step to ensure that your assets are distributed according to your wishes in the event of your passing. By consulting with an estate planning attorney, updating your will, reviewing your beneficiary designations, and creating or updating your power of attorney, you can ensure that your estate plan accurately reflects your current assets and wishes.
