When should you update your estate plan?
The New Year is traditionally a time to clear the deck and start fresh. This makes the early months of the year a fine time to revisit your estate plan. Make sure it is current and reflects changes in your life -- events, sentiments, income level, tax structure, etc. An outdated estate plan is dangerous; it can result in confusion and resentment among loved ones, not to mention unwanted taxes or a contested will.
A sudden occurrence, like an unexpected death or a change in health status, can make your previous decisions obsolete in an instant. Since at the time life-changing events occur we are usually not focused on our wills or estate plans, it is important to plan regular meetings with a highly qualified estate planning attorney to make sure our ducks are in a (recently reviewed) row.
Reasons Your Estate Plan May Require Changes
There are a great many personal reasons, both joyous and painful, that your estate plan may have to be re-evaluated. These include the following:
Addition to the Family
The birth or adoption of a child changes the constellation of the family and you will want to adjust your estate plan accordingly. Not only will you probably want to make the new member of your family a beneficiary, but you (and your spouse or partner, if you have one) will want to choose a guardian for the child if you become unable to care for him or her. In these days of blended families, the addition to your family may come in the form of stepchild as well.
Although the divorce rate finally seems to be dropping, families continue to split frequently. If you go through a divorce, you will no doubt want to take steps to change your beneficiaries. Furthermore, when your children marry, you may want to initiate changes to product your heirs from their own potential divorces.
In the event that you remarry, you will probably want to make changes to your estate plan to include your new spouse and your stepchildren, particularly if they are young. These arrangements may be complex, and there may be a prenuptial or postnuptial agreement involved, so it is essential that you make such changes with the legal guidance of an adept estate planning attorney.
Illness or Injury
Life has a way of surprising us in both good and bad ways. If you or a member of your family is seriously injured or becomes gravely ill or disabled, surely your estate plan will have to be altered to reflect this. You will want to provide for necessary and extended care in your absence and yet protect any benefits the loved one is entitled to.
Changes in Tax Laws
Consulting with your estate planning attorney regularly is also necessary because tax laws change and can affect your plans for the future. Your lawyer will be able to protect your assets on the one hand, and take advantage of any new legislation on the other. If you have moved to another state, the probate laws may be different; this is another area in which your estate planning attorney can keep you safe.
Changes in the Value of Your Assets
Any substantial change in your assets -- whether you get a raise, lose your job or your pension, retire, receive an inheritance or win the lottery -- means that you have to go over your estate plan to make any necessary changes.
Death in the Family
If a member of your family who was a designated beneficiary, executor, or guardian passes away,
in addition to grieving you will have to rework your estate plan to keep it current.
You Want to Add or Subtract a Beneficiary
Change is constant. You may have an altered relationship with someone close that makes you want to add or remove that individual as a beneficiary, or alter distribution of assets. You also may be moved to add or subtract a particular charity from your list, depending on recent experiences.
No matter how unexciting or routine your life may seem to be, it is essential that you review your estate plan with a competent knowledgeable attorney with some regularity. Letting too much time lapse between reviews of your earlier decisions puts your assets and your loved ones at risk.