Is It Time to Update Your Estate Plan?

Your estate plan is based on your financial and personal circumstances and goals at the time you create the plan. As your situation changes, reviewing your estate plan regularly to determine whether you should update it is just as important as establishing the plan. If you do not take into account changes in your life that impact your estate plan, your estate may not be distributed according to your wishes. The types of changes that can impact your estate plan fall into several general categories.

Significant Changes in Your Finances

Any substantial change in your financial circumstances may warrant making changes to your estate plan. A significant increase or decrease in value is one type of change to take into account in your estate plan, but so is a major change in the nature and type of your assets.

For example, if your business interests change through acquisition or divestment, your estate plan should reflect the present state of your business interests. A business acquisition may also trigger the need to create a business succession plan as part of your estate plan, to ensure continuity of the business if you cannot run it temporarily or permanently.

If you have a living trust, it’s extremely important to make certain that new assets you acquire are properly titled and included in the trust. Only assets actually in the trust when you pass away will be excluded from probate. Funding a trust is an ongoing responsibility, which sometimes may necessitate making changes to your estate plan.

A change in real estate assets is another significant financial change that may affect your estate plan. If you buy new real estate or sell previous property, the distribution scheme in your estate plan may be affected. In addition, when a real estate sale and purchase is part of moving to a new state, there are important reasons beyond the change in real estate assets that require reviewing and revising your estate plan. Even if you do not buy property in your new state of residence, you need to make certain all your estate plan documents comply with all legal requirements in the new state.

Other financial changes that make estate plan revisions necessary include retiring or beginning to plan for retirement. Your documents should fully reflect the future you are planning after retirement.

Changes in Your Family or Personal Circumstances

Events in your family or your personal circumstances may also create the need to update your estate plan. Marriage or divorce — your own or that of a family member — can significantly affect your estate plan and other documents related to it, such as retirement accounts and other beneficiary accounts. For example, if your adult child marries, you may need to take steps to ensure that your financial legacy stays in your family, so it is protected in the event of your child’s divorce.

Death and birth are two other important family events that may require making changes to your estate plan. These events can affect not only your beneficiary designations but also the fiduciary designations in your estate planning documents, such as the personal representative of your estate or your agent under a power of attorney or advance directive.

A birth in your family is a cause for celebration — and it may also affect the beneficiary designations in your estate planning documents. Adding a new child of your own to your plan is extremely important, but other births can affect your plan as well. For example, the arrival of new grandchildren frequently prompts grandparents to make certain that their grandchildren benefit from your family legacy.

Your estate planning needs and wishes naturally change as you grow older, because your family and personal circumstances change. It’s essential to make certain periodically that the estate plan you created most recently still comports with your wishes for distribution of your estate and that your wishes concerning designated fiduciaries to act on your behalf are still the same.

Federal or State Legislative Changes

Major changes in federal and state laws can affect your estate plan. It doesn’t happen often, but the impact can be substantial when legislative changes occur. For example, federal tax law changes in 2017 and 2019 affected many estate plans. If you read or hear about legislative tax changes, make a call to your estate planning attorney to find out if the new laws affect your estate plan.

When to Review Your Estate Plan

While lawyers sometimes recommend reviewing an estate plan every three to five years, that vague guideline probably is not sufficient to draw your attention to the need to update your estate plan. A better approach is to conduct an annual review at a set time, such as the end of a year or the beginning of a new year. Tax time is also a convenient time to check your estate plan, especially since you are keenly aware of financial changes when you get ready to file your tax return.

Schedule a Free Consultation With an East Valley Estate Planning Attorney

At Peterson Law Offices, estate planning is a focus of our practice. We take pride in providing high-quality services at affordable prices. We welcome the opportunity to review your current estate plan with you and discuss revisions that may be advisable. Your first consultation is always free of charge.

We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.

Categories: Estate Planning