When you create an estate plan, you accomplish a significant goal. You also gain the peace of mind that comes with protecting your financial assets and legacy. However, you can follow up that accomplishment with a major mistake if you do not update your plan when circumstances warrant. But exactly how do you know when to update your estate plan?
You should update your estate plan when any significant change in your personal or financial circumstances occurs. That’s a pretty vague guideline, so some estate planners recommend reviewing your estate plan with your attorney every three to five years.
That approach may work in some cases, if you remember when that timeline expires. A better approach is to review your circumstances annually to determine if it is time to review your estate plan with your attorney.
The best way to accomplish this goal is to set a specific time each year to do a quick review of our list of events that signal the need to update an estate plan. Filing taxes (or tax day) is a good day to schedule your review, since you are already reviewing your finances. You also can resolve to assess your circumstances every year on your birthday, since that’s a date you won’t forget.
Whatever date you choose, mark your calendar in advance. When the day arrives, go through the list below to determine whether your circumstances changed in a way that necessitates updating your estate plan. There are 10 specific events that warrant reviewing your plan with your attorney.
Your marriage is one of the most significant reasons to update your estate plan. When you and your spouse revise your estate plans to take your new marital status into account, your attorney also will make sure that you update all your beneficiary forms for assets like life insurance and retirement accounts and make necessary changes in property titles.
A second marriage triggers the need to update your plan just as much as a first marriage does. A late life marriage in which one or both spouses have adult children or a second marriage that creates a blended family with minor children poses especially important estate planning considerations.
A marriage in your family other than your own may also require updating your plan as well. For example, if one of your beneficiaries (such as an adult child) gets married, adding a new member to your family can affect your estate plan.
When you welcome a new child into your family, it is essential to revise your estate plan to address future needs of your new family member. You need to update your plan anytime you have a new child or grandchild, whether by birth or adoption.
If you move from one state to a different state, changing your legal residence, the laws governing your estate and estate plan change. You should find an experienced estate planning attorney in your new state of residence to review your estate plan and make any necessary changes.
In most cases, married couples have estate plans oriented around their marital status. When your spouse passes away, your spouse’s estate will go through an estate administration process determined by the estate plan.
At the same time, you should focus on developing a new estate plan of your own to address the significant change in your circumstances. That usually requires more than just changing beneficiaries in a will or trust. Your attorney will make sure that you update assets with designated beneficiaries and jointly titled property. In addition, your lawyer will make appropriate revisions in documents like durable powers of attorney and advance directives.
If any significant change in your business interests occurs, you should review your estate plan with your attorney. That includes buying or selling a business and starting a new business. Any substantial change in your business financial situation, whether positive or negative, warrants updating your plan.
If you or your spouse experience health or disability issues, you should meet with your estate planning attorney at the earliest opportunity. It is important to have all the necessary documents in place to address health-related contingencies that may arise. In addition, your attorney will structure your estate plan to preserve and protect your assets, which is extremely important when you or your spouse experience medical or health issues.
If your executor or trustee or an individual named as guardian for your child passes away or can no longer serve in their capacity, you must update your plan to address the change in circumstances. Similarly, you should update your plan if there is a change in circumstances affecting designated beneficiaries on account death, divorce, incapacity, or other reason.
You also need to revise your plan if you wish to change any of the individuals mentioned in the plan. That’s true even if you just change your mind and want to add or remove beneficiaries.
Any significant change in your financial situation, positive or negative, necessitates updating your estate plan. If you receive a large inheritance (or win the lottery) or the value of your assets changes substantially for any other reason, you should review your estate plan with your attorney to make sure that it takes into account your new circumstances.
If your child, grandchild, or other minor beneficiary becomes an adult, you should review your estate plan with your attorney. As children grow up and mature, their spending habits and financial responsibility become apparent. You should make sure that your original estate plan still makes sense for your beneficiaries.
Changes in federal or state laws can significantly affect estate planning. The Tax Cuts and Jobs Act of 2017 is an excellent example. As the most substantial tax reform in the last 30 years, it led to the need for changes in many existing estate plans.
State laws regarding estates and aspects of estate planning like powers of attorney also may necessitate changes in an estate plan. If you read in the news that a new law impacts estate planning on the federal or state level, pick up the phone and schedule an appointment with your lawyer to review your current plan.
At Peterson Law Offices, wills and estate planning are 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.
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.
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