Reviewing and Updating Your Estate Plan
Reviewing and Updating Your Estate Plan
You’re not required by law to review your estate plan, but it is vital to review your estate plan regularly to ensure it accurately represents your final wishes. Certain events should prompt a review, amendments, or even require a complete rewrite. I recommend reviewing your estate plan every 3 years or when specific life events or changes occur.
Marriage, Remarriage, or Divorce
If you get married, divorced, or remarried, one of the first items on your to-do list should be to update your estate plan. You may want to make your new spouse your beneficiary, and if your spouse has an estate plan, you may want to consider integrating the two plans. If recently divorced, you’ll want to review provisions made for your ex-spouse and children from previous marriages.
Birth or adoption of a child or grandchild
The goal of most estate plans is to minimize estate tax liability and maximize inheritance for descendants. If something should happen to you or your spouse, you’ll want to make sure your children are protected, especially minor children. Safeguarding your children includes making sure to provide for them in your wills, trusts, and life insurance policies.
If you completed your estate planning documents before the birth of your grandchildren, you’d want to review your documents. Grandparents might want to make planned gifts to their grandchildren or set up a special GST trust to avoid generation-skipping tax (GST). A grandparent may decide to fund a 529 account to provide for their grandchild’s future education.
Illness or disability of you, your spouse, or family member
Receiving a terminal illness or degenerative disease diagnosis can be a shocking event. However, it is often a trigger for many people to make sure their affairs are in order. Review your beneficiary designations and estate planning documents to ensure your estate is left to the correct people.
If a family member becomes disabled or seriously ill, review your documents to ensure that your affected loved one will be cared for should something happen to you. You may even want to set up a “special needs trust” if one of your descendants has a chronic illness or disability, which will provide for them and help with obtaining government aid in the future.
Change in Net Worth of Change of Location
If you move to a new state or purchase a secondary residence in another state. Whenever you experience substantial changes in your net worth, whether an increase or decrease, since the last time you revised your estate plan, your estate planning documents may require adjustments.
Estate planning laws are not universal; each state has its laws with different nuances. Some of the differences can seem trivial, and others are more substantive. If you move to a new state, work with your Attorney to make sure your estate plan is in accordance with that state’s laws.
If you buy a secondary residence in another state, your plan might need an update to decide which state should be your principal residence. It may also be a good idea to get a Power of Attorney and Medical Directive that adhere to the new state’s laws, in the event you become disabled there.
Changes in state or federal laws
Any time Congress passes new laws involving estate taxes, check with your Attorney to see if you need to revise your plan.
The foregoing list is not exhaustive. There might be other reasons for you to review your estate plan, depending on your situation. If in doubt, call us and ask.