Estate Planning: When to Update Your Plan and Why

Having an estate plan is a crucial first step in managing your assets and final wishes. However, estate planning isn't a one-time task. In general, it is good practice to review and update your estate plan every three to five years or after significant life events. This regular maintenance ensures that your plan remains current and aligned with your evolving circumstances and intentions.

Marriage and Divorce

Changes to family dynamics can happen at any time. You should make sure that your estate plan reflects these changes. For example, if you have recently gotten married, then you should ensure that your estate plan includes your new spouse. On the other hand, if you have recently divorced, you should consider removing your ex-spouse from your estate plan. However, if you do not wish to make this change even after you have divorced, it is not a requirement to do so. Even if you are not legally married, a review of your estate plan is still recommended in order to ensure that your partner is treated in accordance with your final wishes. 

Children

If you have children, you may also want to revisit how they are taken care of in this estate plan to make sure it is set up exactly how you want it. If your spouse has children from a previous relationship or marriage, then you may also want to include your stepchildren in your estate plan. Your estate plan will include all of your children, whether they are biological or adopted. Whenever your family tree changes, you should have your new child added to your estate plan. You will also want to outline in your estate plan who should be their guardian if you are no longer around. On the same point, if you are unhappy with who you have chosen to be the guardian of your children, you need to ensure that this is changed in your estate plan as well. You may even want to consider adding a successor guardian in your estate plan in case the person you choose is not capable or willing to be the guardian of your children at a later time.

Changes to Beneficiaries

When modifying beneficiaries in your estate plan, it is crucial to update all relevant documents consistently. This includes adding or removing beneficiaries, updating information with providers such as retirement plan administrators, and revising the plan if a beneficiary has passed away. In such cases, you may need to redistribute assets among remaining beneficiaries or designate new ones. It is also important to consider the changing circumstances of your beneficiaries. For instance, if a beneficiary now requires special care, you should outline provisions for their future needs or designate someone to manage their care after your passing. By ensuring all aspects of your estate plan are aligned, you can prevent confusion and accurately reflect your current wishes.

Tax Changes

If you have moved from one state to another recently, your estate plan needs to be reviewed to ensure that it complies with all state laws. In this case, you should review if it complies with your new state's local laws. Even if you have not moved to a new state, the tax laws may change, so it is always good practice to review applicable tax laws and ensure that your estate plan conforms with their most updated version. Another change that can impact your taxes is when your assets change. If your asset list has changed, you need to take a good look at your estate plan and add these assets. Whether or not you add these to your will or trust is something that you will want to consider. Adding them to a trust may have its benefits, but there are some factors that can play into this. Either way, you should revise your estate plan to reflect the new assets.

Other Various Changes

A lot of the changes fit into specific categories, but there are some that are somewhat unique and cannot be placed in these broad categories. These reasons are just as important when it comes to determining if you should update your will. This list contains a few other reasons for you to update your estate plan:

• Do you have a trust and want to assign a new trustee? As part of your estate plan, you should review and revise your revocable living trust if you want to add a successor trustee or substitute trustees. You will need to add this information so that your trustee list is accurate at all times.
• Do you want to change your power of attorney? If you wish to have a power of attorney, whether it is a durable power of attorney or even a healthcare power of attorney, you will want to make sure that your wishes are reflected. If you want to change it, you can revoke it and appoint a new agent. This should always be as up to date as possible.
• Do you have a living will set up? If you do not have a living will already in your estate plan, add one. If you do have one, you should periodically review it to ensure that everything you want in this document is outlined. If you have changed your mind on some things, update this as well.
• Do you own a business or plan to open one? If you own a business or plan to open one, make sure that you not only develop a business succession plan, but also decide who will own the business after you are gone. You can even decide who will run your business.
• Has it been three to five years since you have reviewed your estate plan? If you have not taken the time to review your estate plan in some time, this is reason enough to take a look at it and ensure that there is nothing that needs to be updated that you may have missed during your other reviews, if you have had any. You should review your estate plan with your estate planning attorney on a regular basis.