When to Update an Existing Estate Plan
After signing their estate planning documents, clients often ask, “when should I come back to update these?” It’s a great question, and there are many reasons why a person would want to review and/or update their documents. In this month’s article, I’ll list some of the events that might prompt a person to contact an attorney about updating their estate plan. If you find that you’ve experienced some of the events described below and you’d like to take a fresh look at your estate plan with the help of an attorney, feel free to get in touch to schedule a free consultation.
Your family makeup has changed or will soon change. If your family has grown or shrunk in size due to birth, adoption, death, marriage, or divorce, it is time to review your estate plan. If you have gotten engaged or become separated, these events should also prompt a call to an attorney to make sure that a death before the marriage takes place or before the divorce becomes final doesn’t cause unintended outcomes. For more on the impact of separation and divorce on an estate plan, see my blog post on that topic.
Your net worth changes significantly. Whether your net worth has gone up or down, a big change in either direction is a good reason to review an estate plan. Such a change could introduce new planning concerns that weren’t previously an issue, such as the need to reduce estate tax exposure or the need to plan for Medicaid eligibility.
You acquire property in another state. Did you know it’s possible to have to go through probate in multiple states? People are generally aware that they might have to go through probate in their home state, but they might not know that probate could be required in other states where they own property. Thankfully, this can be avoided with good planning. An attorney can help you update your estate plan to eliminate the need for multiple probates in multiple states.
Your relationships with your named fiduciaries change. For an estate plan to work, we have to put our trust in other people to get certain tasks accomplished. Estate plans typically name agents under health care powers of attorney and general powers of attorney, executors, guardians, and trustees, all of whom have important jobs to perform. After executing estate planning documents, you may find that your relationships with the people you’ve named have changed. Perhaps a named person has moved away, or maybe they now need to devote all of their efforts to matters arising in their own families. Maybe you and your would-be fiduciary simply lost touch. In situations such as these, you may find that your estate plan could benefit from a new cast of key people who can be counted on to manage your affairs.
You become aware of a change in the law (particularly a change in the tax laws). Changes in the law can have big impacts on estate plans. Some of these changes provide exciting new planning opportunities to take advantage of while others introduce potential hazards to avoid. In either case, an attorney can help you chart a path through the new legal landscape that will produce the best outcomes for you, your assets, and your beneficiaries.
You’ve moved to another state. Most states will treat estate planning documents executed in another state as valid. However, there is more to consider beyond whether the documents will be given effect. Differences between the law of the prior state and the law of the new state could have a significant impact on how the terms of the documents are carried out. These differences in law can affect who gets to inherit property, what types of estate administration processes are available, how executors are compensated, and more. Furthermore, some states have estate or inheritance taxes to plan around while other states have no such taxes. If you’ve moved to another state, it would be wise to have a local attorney review your documents to make sure your new state’s laws don’t interfere with your estate planning goals.
Your estate planning objectives change. As you go through life, your estate planning goals may change. Maybe you want to add or remove beneficiaries, or adjust the amounts that each beneficiary will receive. Maybe a change in the life of a beneficiary has made you want to reassess the terms of that beneficiary’s trust (perhaps the beneficiary has shown signs of financial irresponsibility and their trust should be more restrictive). When your objectives change in these ways, your documents should be updated to reflect your new intent.
Your estate plan has not been reviewed or updated in five years. Sometimes our lives change slowly over time without any major events taking place along the way. Still, it’s possible that when we look back, we’ll see that our lives look different now than they did five or so years ago. That’s why it’s a good idea to dust off your estate plan at least every five years to see if its terms still fit your needs. It could be the case that enough small, subtle changes have taken place to warrant a call to your estate planning attorney to freshen things up.
If you have an existing estate plan, you’re off to a great start. By regularly reviewing your estate plan and updating it as needed, you can be confident that your plan will meet the objectives you have today, not the objectives you had some time in the past. If you’d like to review your estate plan with an attorney to make sure your bases are still covered, contact The Law Office of Ryan A. Layton, PLLC to schedule a free consultation.
The information contained in this blog post is intended only as general legal information and should not be construed as formal legal advice on any matter, nor should its presentation be construed as intent on the part of The Law Office of Ryan A. Layton, PLLC to form an attorney-client relationship with any user of this website. For more information, please see this disclaimer.