Estate Planning: When to Update Your Plan and Why

If you have an estate plan already in place, then you have started off on the right path. If you do not have one yet, it is time to get one drawn up so you can have a plan in place. However, once you have your estate plan made, it is not something that you can forget about. In fact, it is recommended that you review and revise your estate plan every three to five years or after you have had a major life change.

Marriage and Divorce

Changes to family dynamics can happen all the time. When this happens, you should make sure that your estate plan reflects these changes. For example, if you have recently tied the knot, then you should ensure that your estate plan includes your new spouse. If you have been married before, another thing to remove from this plan is your ex-spouse if you have not done so already. Additionally, you should get your estate plan updated if you have been divorced. Hopefully you have done this before getting married again, and you should keep this in mind as a trigger for an estate plan update. Change your documents as soon as possible after a divorce because you likely do not want your money to go to your ex-spouse. However, if you do not wish to make this change even after you have divorced, it is not a requirement to do so. You do not even have to get legally married to trigger a review and revision of your estate plan. In fact, if you want to care for your partner and you are not married, now is a good time to ensure that this happens. This is important because if you are not legally married, then your partner may not get anything under the law in the state if it is not specifically laid out in your estate plan. This is true for a domestic partnership as well as a common law marriage.

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 now that you have a new family dynamic. If your new spouse has children from a previous relationship or marriage, then you may also want to include your stepchildren in your estate plan. Stepchildren are not typically included as beneficiaries of an estate plan unless the plan specifically mentions them, so you will need to take the time to include them if you wish to do so. Your estate plan will include all of your children, which includes both your biological and adopted children. The only exception in this case is if you wish to disinherit someone. If you want to disinherit a child or spouse, you will need to make sure that this is included in your estate plan. You should seek assistance with this to ensure that you do not violate any laws in your area. However, this is an important thing to do if you do not want someone in your immediate family to get anything as part of your estate plan. 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 soon as possible.

Changes to Beneficiaries

If you decide that you want to change your beneficiaries, you will want to do this in all areas of your estate plan. You need to do the same if you wish to remove a beneficiary. Unless you take this step, this will not be completed, even if you set it up with the provider, such as with your retirement plan provider. You should ensure this is updated with them as well as in your estate plan so there are no differences and no confusion on the subject. If any of your beneficiaries have passed before you, you should revise your estate plan so that you can include new beneficiaries and/or redistribute property among your current beneficiaries. If any of your beneficiaries have had any changes to their care and their needs, you may want to include a way for you to provide for that care after you are gone. For example, if any of your beneficiaries require special care, you will want to outline how you will take care of these or who you want to manage the care after you are gone.

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 it with an estate planning attorney in the new state since they will be more familiar with the local laws. Even if you have not moved to a new state, the tax laws are always changing. Keep in close contact with your estate planning attorney to ensure that your estate plan is compliant. The right estate planning attorney will keep tabs on this for you, but it is always a good idea to periodically check it or make the call to review it if you learn of any new laws.

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 discuss with your trusted estate planning attorney or financial planner. There may be a benefit of adding it to a trust so it can avoid probate, but there are some factors that can play into this. Either way, you should revise your estate plan to reflect the new asset(s).

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 of the other reasons you need to change 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 it to this component of your estate plan 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 them and appoint a new person to have it. 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.