When to Update Your Estate Plan

image_pdfimage_print

Creating an estate plan is an essential step in ensuring that your wishes are followed after you pass away. However, it is not a one-time task, and your estate plan needs to be updated regularly to reflect changes in your life. In this article, we will discuss in more detail when it is appropriate to update your estate plan and why it is essential to keep it up-to-date.

  1. Major Life Events
    Major life events can significantly impact your estate plan. For example, if you get married, you may want to add your spouse to your estate plan. Conversely, if you get divorced or seprated, you may need to remove your ex-spouse as a beneficiary or executor. Similarly, if you have a child or lose a loved one, you may need to update your estate plan to reflect changes in beneficiaries or executors. Other significant life events that can impact your estate plan include moving to a new state, retirement, or a significant change in financial circumstances.
  2. Changes in Assets
    Changes in assets can also necessitate updates to your estate plan. For example, if you acquire new assets, such as a home or investment property, you may want to adjust your estate plan to reflect these changes. Alternatively, if you sell assets or give them away, you may need to update your estate plan accordingly. This is particularly important if your assets increase or decrease significantly.
  3. Changes in Tax Laws
    Tax laws are constantly changing, and these changes can affect your estate plan. For example, recent tax law changes significantly increased the estate tax exemption, which means that fewer people will need to worry about estate taxes. However, according to the current law, there is a sunset provision where the estate tax exemption will go down substantially in the near future. In addition, there may be changes to state-specific tax laws that should be taken into consideration when updating an estate plan.
  4. Changes in Personal Relationships
    Changes in personal relationships can also impact your estate plan. For example, if you form a new relationship, you may want to add that individual to your estate plan. Conversely, if you end a relationship, you may need to remove that individual as a beneficiary or executor. Similarly, if your beneficiary passes away or becomes incapacitated, you may need to update your estate plan to reflect this change.
  5. Illness of People You’ve Appointed to Handle Your Affairs
    If the person you’ve appointed to handle your affairs in your Trust (the successor Trustee) or under your Powers of Attorney, becomes ill and unable to handle your matters, a change in your documents will be needed.
  6. A Change in Your Favorite Charities
    Many people list charities as beneficiaries or contingent beneficiaries in their estate planning documents. Your current favorite charity may be different from the one you picked when you last revised your documents. This may necessitate an update to your documents.
  7. Updates to Laws and Regulations
    In addition to changes in tax laws, other changes to laws and regulations can impact your estate plan. For example, if there are changes to healthcare laws, you may need to update your healthcare directives. Similarly, if there are changes to the laws governing trusts or wills, you may need to update your estate plan to ensure that it is in compliance with these laws.
  8. Changes in Your Goals and Objectives
    Finally, it is essential to update your estate plan if your goals and objectives change. For example, if you originally set up a trust to provide for your children’s education but they have since graduated, you may want to update your estate plan to reflect your new goals and objectives.

Frequently Asked Questions

It is a good idea to review your estate plan at least once a year to ensure that it accurately reflects your current wishes. However, if you experience any significant life changes or changes in your goals and objectives, you should review and update your estate plan accordingly.

An estate plan typically includes a will, trust, power of attorney, healthcare power of attorney and healthcare directive, and various types of real estate deeds. However, the exact documents needed will depend on your specific circumstances.

It is highly recommended that you work with an attorney to update your documents. Trying to do so on your own or through an online service can often lead to disaster and unintended consequences. An attorney can ensure that the changes are made correctly and that your estate plan reflects your current wishes.

If you don’t update your estate plan, it may not accurately reflect your current wishes. This can lead to unintended consequences, disputes among your beneficiaries, and even result in your assets being distributed in a way that you did not intend. For example, if you have a child after creating your estate plan and fail to update it, your assets may be distributed among your other beneficiaries, leaving your child without an inheritance. Similarly, if you fail to update your estate plan after a divorce, your ex-spouse may still be listed as a beneficiary or executor.

Updating your estate plan can also help you save on taxes and ensure that your assets are distributed in a way that maximizes your family’s financial benefits. A well-crafted estate plan can also help avoid probate, saving your loved ones time and money.

In conclusion, updating your estate plan is crucial to ensure that it accurately reflects your current wishes and that your loved ones are taken care of after you pass away. By staying up-to-date with changes in your life, laws, and regulations, you can ensure that your estate plan is comprehensive and effective. If you’re unsure whether your estate plan needs updating, it’s always a good idea to consult with an estate planning attorney. They can provide you with valuable guidance and ensure that your estate plan reflects your current wishes.

Image of Chris Cox, Attorney at Law
update your estate plan
image_pdfimage_print