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5 Life Occurrences When Your Estate Plan Should Be Updated

by Caldwell Trust

If you already have your will, trust, and other estate planning documents in place, congratulations. You’ve taken an important step toward ensuring your wishes will be carried out when you die, or during periods of lifetime incapacity. However, don’t make the mistake of thinking your documents are carved in stone; they’re not. In fact, you should review them every three years or even more frequently, such as when reviewing your financial plan. Several types of life events could necessitate changes to your existing estate planning documents:

1. Change in Your Dependents’ Needs

Your estate plan was based on your dependents’ needs at the time you signed your documents. Of course, children and other dependents grow and mature over time, which can make your estate plan outdated. If any of the following situations applies to you, it may be time to update your plan:

  • The birth or adoption of a child/grandchild
  • A child/grandchild needs educational funding
  • A child/grandchild becomes an adult (age of 18)
  • Death or change in circumstances of the guardian named in your will for minor children
  • Changes in number of dependents (e.g., addition of caring for an adult)

2. Changes with Your Spouse or Other Family Members

Similarly, changes to your marital status or to a family member’s health can impact your estate plan and may mean it is no longer aligned with your wishes and goals. Some examples include the following:

  • Marriage or divorce
  • Illness or disability of your spouse
  • You have a blended family and want to provide for stepchildren
  • A family member passes away or becomes ill or disabled

3. Major Changes to Your Assets or Liabilities

A big part of estate planning is based on the types and size of assets you own. When your financial picture changes, either for the better or worse, your will and trust may need to be adjusted. Failing to plan for these types of changes could mean your estate plan is incomplete or is no longer accurate:

  • You purchase property, a home, or other large asset
  • You borrow a large amount of money or take on liability
  • Large increases or decreases in the value of assets, such as investments
  • You (or your spouse) receive a large inheritance or gift

4. Career and Goal Changes

Your estate plan should also accurately reflect your career goals and those of your spouse (if applicable.) Business owners may be particularly at risk of having outdated estate plans if they don’t make periodic updates. Consider revisiting your plan if any of these situations apply:

  • Career changes, such as a new job or promotion
  • You start or close a business
  • Change in your (or your spouse's) financial or other goals

5. Changes to the Law

Laws related to estate planning don’t change frequently, however there are some situations when you should evaluate your plan against current laws. Specifically, estate planning laws are state-specific. So, if you move from one state to another, it’s a good idea to have your plan reviewed in your new state.

Federal and state estate tax laws can and do change over time. It’s important to ensure your estate plan is structured to take full advantage of any applicable estate tax exemptions.

Other Potential Scenarios

Nobody can predict the future; there are many potential factors you might not be able to foresee. That’s all the more reason you should review your plan regularly. Additional reasons to evaluate your will, trust, and advance directives include:

  • Changes to your life or long-term care insurance coverage
  • Change in intentions (you want a new person to have power of attorney, guardianship, etc.)
  • Death or change in beneficiaries (e.g. you want to add a charity, a beneficiary predeceases you)
  • Death or change in circumstance of your executor or trustee

Are Your Estate Planning Documents Current?

Preparing your estate planning documents was an important step, but don’t take a “set it and forget it” approach to your plan. It’s just as critical to be diligent and establish routines for appropriate estate plan management — so that your wishes for your legacy are fulfilled, and your beneficiaries are taken care of.

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