The Importance of Updating Your Estate Plan
The Importance of Updating Your Estate Plan
We sometimes think of estate planning as a one-time event. Remember that our lives change, and so must our plans. If you have not signed your estate planning documents in several years, probably, the plan will not meet your objectives. Checking your plan with an estate planning attorney regularly will help ensure it is according to current laws and what is important to you.
While there is no one-size-fits-all solution, reviewing your estate plan every three to five years is a fair rule of thumb. However, some life events, such as marriage, divorce, the birth or adoption of a child, significant changes in your financial condition, or purchasing new property, should prompt a quick update. Consider any of these anniversaries as a cue to revise your estate plan.
Common Reasons to Update Your Estate Plan
Outdated estate plans may name personal representatives or fiduciaries who are no longer suitable for the post owing to age, specific physical issues, or even death. One of your children, now of adequate age and maturity, could be a better candidate. If you identify a professional, such as an attorney or a CPA, for one of these crucial positions, that individual may have retired or stopped practicing. The first step in ensuring a successful plan is to review your fiduciaries.
Marriage and Divorce
Changes in the dynamics of a family can occur at any time. When a change occurs, make sure your estate plan matches those changes. Marriage or divorce can have a substantial influence on your estate planning. If you marry, you should make your spouse a significant beneficiary and alter your will to reflect this change.
If you do not want your assets to go to your ex-spouse, you should alter your beneficiary designations and remove your former spouse from your estate plan during a divorce.
Beneficiaries have not been updated.
You may have added new family members to your estate plan since the last time you updated it, such as a new kid or grandchildren. Perhaps your relationship with a beneficiary has altered due to a divorce, and you no longer want them to be a benefit. Any changes in family circumstances should be discussed with an estate planning attorney.
Changes in Financial Situation
Significant changes in your financial circumstances, such as getting a large inheritance, launching a successful business, or facing financial difficulties, should encourage you to review your estate plan. Adjusting asset distribution, adjusting charity bequests, or applying tax mitigation methods may be required in such cases.
Incorporating digital assets into your plan may have been fine when you first established it. Many of us nowadays save images in the cloud, own an online business or web domains, cryptocurrencies, credit card reward points, and essential logins to social media platforms. You must examine how ownership of these digital assets will be transferred right after you pass away.
Property Acquisition or Relocation
Moving to a new state or purchasing extra property might have legal and tax consequences. Each state has its own estate planning rules, so updating your plan to comply with the laws of your new jurisdiction is critical. Furthermore, if you acquire substantial assets, such as real estate or precious collections, including them in your estate plan is critical.
Why is it critical to keep your estate plan up to date?
Your circumstances alter
Your estate plan should be updated to suit your present situation. You must revise your estate plan whenever you have a kid, get married or divorced, or encounter a big change in your financial circumstances. Please do so to avoid unforeseen effects and disagreements among your beneficiaries.
Laws and rules evolve.
Estate planning laws and rules change regularly. If you do not update your estate plan to reflect these developments, your strategy will become outdated and ineffective. Changes in tax regulations, for example, can have a substantial influence on your estate plan, so it's critical to stay informed and update your plan as needed.
The circumstances of your beneficiaries change.
The circumstances of your beneficiaries may also change over time. A recipient, for example, may develop a condition or addiction that necessitates specialized care. If you do not update your estate plan to reflect these developments, your beneficiaries may not receive the required assistance.
So, how frequently should you revise your estate plan? It's a good idea to review your estate plan every few years or if a major life event occurs. It's also a good idea to have an attorney evaluate your plan to ensure that it's up to date and represents your current intentions.
Finally, revising your estate plan regularly is critical to ensuring that your desires are carried out after your death. Please do so to avoid unforeseen effects and disagreements among your beneficiaries.