Think you’re done with your estate plans once they’re set up? Not quite. It’s crucial to keep them updated to reflect your current situation. For instance, if you’ve recently achieved a long-term financial goal like paying off a debt or buying a house, your estate plans won’t automatically adjust to these changes. This could leave your loved ones in a bind when you’re gone, as there won’t be a designated beneficiary for these new assets. To avoid this, make sure to review and tweak your estate plans regularly.
So, when should you update your estate plans? Not every month, don’t worry. You only need to revisit them when there are changes in your assets, beneficiaries, or estate administrators. Here are some key moments when you should consider an update:
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After a Major Life Change: Big life events can significantly affect your estate plans. For instance, if you get married, you’ll want to include your new spouse and any stepchildren in your plans. Similarly, after a divorce, you’ll likely want to revise what you’re leaving to your ex-spouse and possibly remove them from your power of attorney and living will. The birth or adoption of a child or grandchild is another major event that should prompt an update. As your children and grandchildren grow and reach milestones, your wishes for them might change, and your estate plans should reflect this.
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When Someone Relevant to Your Estate Plans Becomes Seriously Ill, Disabled, or Dies: If a beneficiary, executor, guardian, child, spouse, or other family member becomes seriously ill or disabled, or passes away, you should review your documents. This can affect what assets you want them to receive and how, and whether they can legally act on your behalf.
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If You Move to a Different State or Country: Laws and taxes related to inheritance vary by location. If you move, make sure your estate plans align with your new state or country’s laws and regulations.
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If Your Relationship With a Beneficiary Changes: If your relationship with a beneficiary changes permanently, you might want to update your estate plans. For example, if you become estranged from a beneficiary, you might want to disinherit them.
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After a Significant Financial Change: Any major changes in your personal finances should prompt a review of your estate plans. This could include changes in your assets, buying or selling real estate, changes in your business interests, changes in your job, or changes in your financial goals.
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After a Change in Federal or State Tax Laws: Tax laws change from time to time, and so do inheritance laws. Even if you haven’t experienced any major life events or changes in assets, it’s a good idea to review your estate plans regularly to ensure they still conform to the latest tax laws.
Even if none of the above applies to you, it’s still a good idea to review your estate plans every three to five years. Your assets, personal opinions, beliefs, and relationships may change over time, and your estate plans should reflect these changes.
Why should you keep your estate plans updated? For peace of mind, to make it easier to settle your estate, to ensure beneficiary designations are relevant, and to ensure executors, trustees, and agents are relevant.
How do you update your estate plans? For small changes, you can use a codicil to update your will. But for major changes, or if you’re making multiple updates, it’s best to make a new will altogether.
Remember, life is full of changes. If you don’t update your estate plans to reflect them, there will be no way for your loved ones to determine how to distribute your estate. So, keep your estate plans updated, inform relevant parties, and stick to any relevant laws in your state.
