How Often Should You Review and Update Your Estate Plan?
After you put all of the time and thought required into your original estate plan, the last thing you want to hear is that it needs to be reviewed and updated periodically. That said, there are many events which occur in life which require an update to your estate plans, and some goals naturally go out of date and therefore require review and change. No matter what, we recommend our clients and potential clients review and update their estate plans every three years, and no longer than every five years, to ensure the plans are still reflective of your goals. Some life changes are so major that you should review and update your estate plan once they occur.
If you get married, you should not wait to update your estate plan. You will likely want to provide for your spouse in the event of your death, and will likely want your spouse to be a beneficiary, executor, and/or trustee of your estate. If this is a second marriage, you may need to update the division of assets in your estate plan to ensure that your new spouse is treated fairly but that your children from a prior marriage also receive the assets you want them to have. No matter what, if you have an estate plan and you get married, you will in almost all cases need to update your plans.
Having a child triggers the need to update your estate plans and provide for your child in the event you die. You can choose a guardian, set up a trust to be held in your child’s name, and protect your assets for their use until they reach the age of your choosing. The birth of a grandchild also triggers the need for estate planning changes for many people. People sometimes create a trust fund to benefit a new grandchild, or make the grandchild a beneficiary of some assets.
Estate planning objectives almost always change upon divorce. It is likely that your ex-spouse is an executor, trustee, or beneficiary in your estate documents. At a minimum, you will want to remove your ex-spouse and name somebody new.
Child Who Comes of Age
You will also need to update your estate plan once your child turns 18. For example, you will no longer need a named guardian in your will at that point, and you may wish to change how the trust you have operates. Many of our clients like to name their adult children as executors or trustees of their estate.
If somebody dies who is a beneficiary, trustee, or executor of any part of your estate, then you will need to remove this person from your estate plan. You will also need to name a replacement, or change beneficiaries, or appoint a new trustee or executor.
Moving to a New State
Each state honors estate plans made in any other state, but if you move, you should have an attorney review the estate plan you have in place to ensure that it is valid. Because laws differ by state, you want to ensure that your wishes will be honored in your new state, and if they need to be changed to do so, you want to make sure an attorney does that for you.
If the Estate Tax Law Changes
Estate plans are always created with an eye to minimizing tax liability of an estate upon your death. As such, the plans are made in accordance with the tax laws that are in place at the time you make your estate plan. If the estate tax law changes, your plans need to be reviewed to ensure tax liability upon your death remains minimized.
Estate plans aren’t made to last forever; they must be reviewed and updated periodically, and every time a major life change occurs. This is not an exhaustive list, but an idea of what types of events warrant review of your plans. If you have any questions about whether you should update your estate plan, contact one of our experienced estate planning attorneys for an initial consultation.