Having an estate plan in place is arguably the most crucial step an individual can take in protecting and managing their assets. However, it’s not as simple as drafting one and putting it in a drawer somewhere to collect dust.
The reality is that to ensure maximum effectiveness, estate plans should be reviewed and updated periodically to reflect any changes. In addition to this, certain major life events can spur an additional review since they can have a significant impact on your estate plan. Some of the most common circumstances include:
A Change in Family Size
Whether it is the welcome birth or adoption that increases your family size or the passing of a loved one, changes in family size can have an enormous impact on your estate plan. If you are a parent, the birth of a new little one often means that you need to identify guardians, beneficiaries, and in many cases, trustees. Even as a grandparent, you may want to update your estate plan to include any new grandchildren you welcome to the family. Updating your plan after an addition to the family ensure the new member won’t be overlooked.
Conversely, during the unfortunate loss of a loved one, you will want to be sure to remove them from your plan. While this may be the last thing on your mind, its important to remember that a primary goal of an estate plan is to prevent family feuds over assets – which are more likely to occur if any of your named beneficiaries precede you in death.
Major Financial Changes
Despite our best attempts at planning and controlling our financial future, there are simply some life events that can cause a tremendous change in one’s financial state – such as a lawsuit, an inheritance, a lucrative business deal, a layoff, or even an expensive illness. Whether your assets suffer a significant loss, or you receive an unexpected windfall, any major changes in them should prompt you to update your estate plan.
Your plan should be updated in a way that makes sense, given your new circumstances. Sometimes, this means creating or dissolving a trust or other financial entity. No matter the details, you will want to reevaluate your estate plan to ensure that your assets are protected to the best extent and will still be distributed the way you want them to be.
A Change in a Relationship
Family rifts happen. For spouses, this often leads to a divorce, while other family members may simply become estranged. In some instances, a major rift may not even occur, but you may realize that people change, relationships have evolved, and your own wishes may have changed accordingly. This is particularly true when your relationship with an executor, a trustee, or a health care proxy suffers a change. These individuals serve to make crucial decisions, and in the event that a relationship change prompts you to feel that they are no longer the best choice to serve in this capacity, you will want to make the changes as soon as possible.
Many individuals plan to spend their retirement years in a different location from where they may currently reside to be closer to family or to enjoy more temperate areas. Estate planning laws vary from state to state, which means that a move across state lines should prompt an estate plan review simply to ensure compliance with local regulations. If your move is international, changes to your estate plan can become even more complicated. A thorough review can ensure that any required adjustments be made so that your plans are legal and can be follow through on no matter where you are located geographically.
While these four common life events should prompt you to consider updating your estate plan fairly quickly, it's important to remember that estate plans should also be reviewed on a regular basis (usually every one to two years) to ensure that they also incorporate any minor changes as well. Completing this regularly would ensure that your account information is updated and you have a current reflection of your insurance policies and other assets.
By making sure that your estate plan is updated and accurate, you can make tasks easier for your executor, ensure your wishes are carried out exactly as you would like and minimize the risk that your family will experience conflict. These steps are crucial in achieving a lasting legacy for your family.
You can read more about how our process works, how we can make sure we are a good fit for your needs, and how to get started today right here.