One of our most common client questions at Bequest is: how often do I need to update my estate plan? While we aim to draft a flexible estate plan that doesn’t require constant updates, an estate plan isn’t a one-and-done affair for most clients. Life is constantly evolving, and as certain circumstances change, so should your estate plan. This article will explore key situations that indicate it’s time to amend your estate plan.
Major Life Events: Life is full of significant milestones that can impact your estate plan. Certain events, such as marriage, divorce, the birth of a child or grandchild, or the death of a beneficiary, may necessitate amending your plan. When any of these events occur, it’s crucial to review your documents and adjust your plan to accommodate the changes in your life circumstances and relationships.
Relocation or Changes in Jurisdiction: Moving to a different state or country can trigger the need for amendments to your estate plan. Each jurisdiction has its own set of laws and regulations governing estates and inheritance. Updating your plan to reflect the laws of your new residence avoids complications and unintended consequences. Consult with an attorney familiar with the laws of your new jurisdiction to ensure your estate plan remains valid and effective.
Changes in Financial Situation: Your financial situation directly impacts your estate plan. Suppose you experience substantial changes in your wealth, such as receiving a large inheritance, selling or purchasing valuable assets, starting a new business, or retiring. In those situations, it is advisable to review your estate plan. Consider whether your current plan adequately addresses your unique financial situation and adjust it accordingly to optimize your asset distribution and minimize tax implications.
Need for a Different Guardian, Trustee, or Executor: If you appointed guardians for your minor children or designated trustees or executors to manage your assets, it is important to review these choices periodically. Over time, relationships may change, people get older, and the people you once trusted to fulfill these roles may no longer be the best fit. By amending your estate plan, you can ensure that the individuals responsible for the well-being of your loved ones and the management of your assets are still suitable and willing to fulfill their duties.
Changes in the Law: Changes in the federal, state, or local tax laws necessitate a review of your plan. Tax laws are always subject to change, and tax legislation modifications can significantly impact your estate plan. Stay informed about any alterations in estate tax thresholds, exemptions, or deductions that may affect your estate planning strategies. Regularly reviewing your estate documents with a knowledgeable estate planning professional will help ensure that your plan is structured in a tax-efficient manner.
By paying attention to major life events, changes in your financial situation, relocation, people nominated to play key roles, and changes in the law, you can take proactive steps to keep your estate plan up to date and aligned with your current intentions. Remember, consulting with an experienced estate planning attorney can provide invaluable guidance during the amendment process and ensure your estate plan remains valid and effective.