Your estate plan is a crucial aspect of your financial and personal affairs, outlining how your assets, estate, and belongings will be handled and distributed according to your wishes. However, simply creating an estate plan is not enough; it’s equally important to regularly review it in order to ensure that it reflects your current wishes and meets your needs. In this article, we’ll explore the importance of regular estate plan reviews, how often you should update your planning documents, and the key reasons why updating your estate plan is essential. Whether you’re experiencing a significant life change or simply want to ensure that your estate remains up to date, this guide will help you navigate the process of updating your estate plan with confidence.
What Is An Estate Plan?
An estate plan is a detailed set of legal estate documents and instructions that outline how you’d like your assets and estate to be managed and distributed after your death or in the event of incapacity. It typically includes a will, trusts, powers of attorney, and advance directives.
Your estate plan serves as a roadmap for your loved ones and helps to ensure that your wishes are carried out. Without a detailed estate plan, your belongings may be distributed according to your state’s laws, which may not align with your intentions.
Why Regular Estate Plan Reviews Are Important
Many people think once you draft a will or an estate plan, it’s done. However an estate plan is a living document that should be reviewed regularly to ensure it’s up to date.
Regularly reviewing your estate plan is critical to ensure that it reflects your current wishes, takes care of the important people in your life, and meets your evolving needs. Life is constantly changing, and your estate plan should be flexible enough to accommodate these evolving changes.
How Often To Update Planning Documents For Your Estate
While there is no one-size-fits-all answer to how often you should review an estate plan, it is generally recommended to review it every 3-5 years or whenever there is a significant life change or event (more on this below). It’s important not to wait too long to review your estate plan otherwise you’ll have more work and require more time with an estate attorney to solidify all of the details. Some people choose to review their estate plan annually, around the same time they do their taxes, review their documents, and consult with their financial advisor.
What To Review With Your Attorney
When meeting with your attorney, plan to review the following;
- Verify that your estate is in line with current Federal and State laws.
- Ensure you possess all essential documents, such as a medical directive and power of attorney.
- Review that your estate planning accurately mirrors your present desires, including beneficiary designations and asset division.
- Address any life changes that may affect your estate plan, such as divorce, remarriage, change in residency, or new additions to your family.
Reasons To Update Your Estate Plan
One of the main reasons to review your estate plan regularly is to account for significant life events. Events such as marriage, divorce, the birth of a child, or the death of a loved one can have a profound impact on your estate plan and may necessitate updates. Deciding how to transfer your estate to your living relatives ensures that things are peaceful and planned out for your loved ones.
Additionally, changes in the law can also affect your estate plan. Tax laws, in particular, are subject to frequent changes, and failing to review your plan to reflect these changes could result in unintended tax consequences for your heirs.
Family & Life Changes
Life is full of changes, especially in family dynamics. To keep your estate plan in line with your wishes, it’s important to review it as needed. This ensures that your estate and assets are distributed according to your current desires and helps protect your loved ones.
Marriage or Divorce
Changes in family dynamics are common and require an update to your estate plan to reflect these changes. For instance, if you recently got married, ensure your plans for your estate include your new spouse. If you’ve been married before, remove your ex-spouse from your plans for your estate. It’s also crucial to revise your plan after a divorce. Additionally, even if you’re not legally married, you can update your estate plan to provide for your partner. This is important because without a legal marriage, your partner may not receive anything under state law unless specified in your estate plan.
Children
When your family grows or changes, it’s essential to review your estate plan to reflect these new dynamics. This includes ensuring that your children, both biological and adopted, are included in your plan. If you have a new spouse with children from a previous relationship, you may want to include your stepchildren in your estate plan as well. Stepchildren are not automatically included as beneficiaries, so it’s important to specifically mention them in your plan if you wish to do so. Additionally, if you need to disinherit a child or spouse, you must explicitly state this in your estate plan. Seek legal advice from a planning attorney to ensure compliance with local laws. It’s also crucial to revise your plan to include any new children and designate a guardian for them if you’re no longer able to care for them. If you’re unhappy with your chosen guardian, update your plan promptly.
Change In Taxes Or Location
If you’ve recently moved to another state, it’s important to review your estate to ensure compliance with local laws. Meet with an attorney specializing in estate law in your new home state for guidance. Estate taxes are constantly changing, so stay in touch with your attorney to keep your estate compliant. Changes in your assets can also affect your estate; discuss with your attorney whether to include these changes in your will or trust. Regular reviews and revisions to your estate are essential to ensure it reflects your current situation.
New Job Or Starting A Business
A new job or business venture can also impact your estate plan. If you start a new business, you may need to update the plan for your estate to include provisions for the distribution of your business assets.It’s important to update estate plans to include who you want to run your business as well.
Update Estate Assets
As your assets grow or change, it’s important to update your estate to As your assets grow or change, it’s important to update your estate to make sure that your assets are distributed according to your wishes. This may include adding new assets to your estate such as inheritance or investments, or removing assets that you no longer own. Retirement planning is also a key consideration, as it can impact your estate. Discuss with your attorney how your retirement plans affect your estate and whether any adjustments are needed to align with your goals. Regular reviews and updates to your estate are essential to ensure it reflects your current situation.
Personal Health Changes
Changes in your health can also necessitate updates to your estate. If you become incapacitated, you may need to revise your powers of attorney or advance directives to make sure that any of your wishes regarding medical care and end of life plan are followed. Your estate attorney can help assist you in navigating these changes and ensure that your estate is in line with your current situation. Regular reviews and updates to your estate are essential to ensure it reflects your wishes and circumstances.
Estate Planning With A Planning Attorney
Hiring an estate planning attorney can help confirm that your estate planning is comprehensive and up to date. An attorney will be very helpful in assisting as you navigate complex legal estate planning issues, and make sure that your estate plan reflects your wishes.
Regularly reviewing and updating your estate is critical in ensuring that your wishes are carried out exactly the way you want and that your loved ones are protected. By staying diligent and working with a professional, you can make sure that your estate planning remains current and effective. Contact our office for more information on estate planning and assistance.