Estate Planning - Question #3:
How often should I review and update my estate plan?
Would you expect that your family, hopes and desires, and assets would remain static over the course of your life? Probably not. For that reason, changes to estate plans are – and should be - inevitable. Quite often, estate planning is incorrectly perceived as a “one and done” transaction; however, this mentality can be costly. In general, we recommend a detailed review of existing estate plans at least every 2-3 years - or immediately following any of the significant events below.
Most Common Reasons to
Consider Updating an Estate Plan
- Additions to Family. Whether a new baby or a new spouse, additions to a family can be a reason to expand the beneficiaries or fiduciaries named in the estate plan.
- Divorce or Separation. A change in marital status can cause an obvious shift in assets owned, how they are titled, and wishes for their disposition. Additionally, if a spouse was previously named to serve as a fiduciary in the plan, likely consideration should be given to swapping them out in favor of a different friend or relative.
- Aging. All adults over the age of 18 should have an estate plan, and there are frequently significant life events in the first 10-15 years thereafter which could impact the goals of an estate plan. Similar significant life events often unfold in later years as clients become elderly. The best time to update an estate plan in this context is before any type of incapacity begins.
- Changes in Relationships. Relationships evolve. If a former “key player” in an estate plan is no longer a trusted person, or if a former beneficiary in an estate plan no longer needs or should receive inherited assets, the plan should be re-visited and amended.
- Starting a Business. While new businesses can mean new opportunities, they can also present new risks. With proper planning, however, risks can be mitigated and family protected in the event of the entrepreneur's credit challenges or untimely demise.
- Changes in Assets. Significant changes, whether an increase or decease, to assets should cause a reexamination of not only the structure of the plan but also the tax consequences of the change.
- Changes in the Law. Laws are not static and frequently change. The impact of the change may not be well-publicized, but there is a responsibility to stay abreast of the changes so appropriate measures can be taken to address the impact to existing estate plans.
- Charitable Intentions. Often, aging and retirement can spawn a new desire to leave a legacy through charitable giving. When intentions shift toward philanthropic endeavors, the estate plan might also be updated to incorporate them.
- Moving Across State Lines. Changes to residency should trigger a re-evaluation of the estate plan because state law can vary greatly. Although documents prepared in a prior state may still be valid, simple updates to bring them into compliance with the new state's laws are advisable.
- Receiving an Inheritance. If an inheritance is received, it could result in a significant change to assets which requires a re-evaluation of the disposition of assets and the tax implications within the estate plan. It may also lead to additional asset protection considerations.
The above represent just some examples of reasons to re-visit an estate plan. Our attorneys are experienced with evaluating current needs against current documents and advising on updates that may be advantageous to consider. Contact our office for more information or to schedule a detailed review of an existing estate plan.
Check back regularly for continuation of our FAQ Series on the blog! We will cover the frequently asked questions from our Practice Area pages in more depth. Please connect with our team or contact our office if you have any questions or to learn more.