Life isn’t static, so no matter how carefully you put together your estate plan there may come a time when you need to update it.
Generally speaking, updating an estate plan is essential to ensure that your wishes are accurately reflected and that your assets are distributed according to your true intentions.
What should prompt a review?
All kinds of life events can prompt an update to your estate plan, but here are some of the most common:
- Changes in your beneficiaries: If your family structure changes due to marriage, divorce, the birth or adoption of children or the death of a family member, you may need to update your estate plan to include (or exclude) new beneficiaries, guardians or trustees.
- Changes in your financial situation: Whether you receive an unexpected windfall, inherit a lot of assets or experience financial setbacks, you may need to make some adjustments to the way your assets will be distributed or your charitable contributions.
- Moving to a different state: Estate planning laws and regulations can vary significantly between states. If you relocate, it’s important to review and potentially revise your estate plan right away to ensure it complies with the laws of your new jurisdiction. You may need to completely start over.
- Changes in health or capacity: If a family member experiences changes in their health or mental capacity, you may need to update documents like your durable power of attorney, healthcare proxy or living will to address medical and financial decision-making. You may also want to establish a trust to protect them should you precede them.
- Changes in business ownership: If you own a business, changes in your ownership interest or business structure may require you to update your succession plans.
- Changes in tax laws: Tax laws, including estate tax and inheritance tax laws, can change over time. Regularly review your estate plan to ensure it is optimized for tax efficiency.
- Changes in your goals or feelings: As your personal goals or wishes evolve, you may want to adjust your estate plan to reflect your current priorities.
Even if nothing has changed, you should probably review your estate plan every three years, at the longest, so that you stay familiar with the plan’s provisions. Regularly reviewing and updating your estate plan ensures that it continues to serve your best interests and those of your loved ones.