Creating an estate plan takes considerable planning. After it’s completed, you feel a sense of accomplishment and relief knowing that you have taken an important step to protect your loved ones if something happened to you.
However, just because you completed your estate plan doesn’t mean you can put it in a safe place, never to be seen again until it’s needed. Your life changes, and your estate plan should reflect them. An outdated estate plan can have several unpleasant implications.
The only constant is change
Your life is a series of events. Most of them are seemingly minor, but certain major occasions should trigger a review of your estate plan. Changes in your marital status can affect how your estate is managed and distributed. You may want to add or remove a spouse, update beneficiaries or reverse decision-making roles, such as power of attorney and health care agent.
Welcoming a new child or grandchild, or saying goodbye to a loved one, means updating your plan to reflect those changes. These should include creating guardianships for minor children, adjusting inheritances or setting up a trust to ensure future financial security.
Buying a home, starting or selling a business, receiving an inheritance, or experiencing significant financial growth or loss are all good reasons to review your estate plan. Documents need to be updated to reflect new assets or to adjust distributions if there is a substantial change in your assets.
A serious illness or diagnosis can turn your life upside down. Take some time to review your powers of attorney and healthcare directive and update them, if needed. You may also want to do some long-term care planning.
Even if you manage to go through life with no significant events, it’s still smart to review your estate plan every 3 to 5 years. Changes in government often bring new federal and state laws that can affect how your estate is taxed or administered.
Your estate plan is a living set of instructions that should grow and change as you do. Consulting with a legal representative can help ensure that your documents are legally compliant and tax-efficient.
