If you already have your will, trust, and other estate planning documents in place, you’ve taken an important step toward ensuring your wishes are honored in the event of death or incapacity. However, it’s important to recognize that these documents are not static. To remain effective, your estate plan should be reviewed at least every three years when making significant financial updates. Life events and changing circumstances can also create the need for revisions. Let's take a look at some of the times you need to review your estate plan.
1. Change in Your Dependents’ Needs
Your estate plan was based on your dependents’ needs at the time you signed it. Of course, children and other dependents grow and mature over time, which can make your estate plan outdated.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)
-
The guardian named in your will has passed away or can no longer serve
- Changes in the number of dependents (e.g., beginning to care for an adult)
2. Changes with Your Spouse or Other Family Members
Changes in family relationships or health circumstances can significantly impact your estate plan. 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 key family member passes away or becomes 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 situation 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 Business owners may be particularly at risk of having outdated estate plans if they don’t make periodic updates.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
-
Your financial goals or those of your spouse shift significantly
5. Changes to the Law
Estate planning laws are largely state-specific and do change over time, whether it’s updates to tax codes, regulations governing trusts, or state-specific probate rules. Even minor legislative shifts can significantly impact the effectiveness of your current plan. Staying informed and making necessary adjustments ensures your documents remain compliant and optimized for current legal standards. It’s essential to re-evaluate your documents if:
-
You move to a different state
-
Federal or state estate tax laws change
Other Potential Scenarios
Life is unpredictable, which is why regular reviews of your estate plan are critical. 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 the circumstances 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. Regularly reviewing and updating your documents ensures your wishes are honored, your legacy preserved, and your loved ones protected. If you’re unsure where to begin or need help reviewing your plan, Caldwell is here to guide you every step of the way. Contact us today to schedule a consultation and ensure your estate plan is up to date and working for you.
Frequently Asked Questions About Updating Your Estate Plan
How often should you update your estate plan?
It is generally a good idea to review your estate plan at least every three years and whenever you experience a significant life or financial change. Regular reviews can help ensure your will, trust, beneficiary designations, powers of attorney, and other documents continue to reflect your current wishes and circumstances.
What life events should trigger an estate plan review?
Major life events such as marriage, divorce, the birth or adoption of a child, the death of a beneficiary or trustee, a significant change in assets, starting or closing a business, or moving to another state are all reasons to review your estate plan. Changes in federal or state law may also make an update necessary.
Should I update my estate plan after getting married or divorced?
Yes. Marriage or divorce can affect how you want assets distributed, who you name as a beneficiary, and who is authorized to make financial or healthcare decisions on your behalf. Reviewing your estate plan after either event can help ensure your documents accurately reflect your current relationships and wishes.
Do I need to update my estate plan after having a child or grandchild?
The birth or adoption of a child or grandchild may be a good reason to revisit your estate plan. You may want to add beneficiaries, reconsider how assets will be distributed, plan for education expenses, or update guardianship provisions for minor children.
Should I review my estate plan after buying a home or receiving an inheritance?
Yes. Significant changes to your assets or liabilities can affect your existing estate plan. Purchasing property, receiving a substantial inheritance or gift, taking on major debt, or experiencing a significant increase or decrease in investment values may warrant a review of your will, trust, and other planning documents.
Do I need to update my estate plan if I move to another state?
Moving to another state is an important reason to have your estate plan reviewed. Estate planning, probate, trust, and tax laws can vary by state, so documents created under one state's laws may need to be evaluated after you establish residency somewhere new.
What happens if my executor, trustee, guardian, or power of attorney can no longer serve?
If someone you named to an important role in your estate plan dies, becomes incapacitated, or is no longer willing or able to serve, your documents should be reviewed. Updating these appointments can help ensure that someone you trust is available to carry out your wishes or make decisions on your behalf.
Does starting or selling a business affect my estate plan?
It can. Starting, growing, selling, or closing a business may significantly change your assets, liabilities, income, and long-term goals. Business owners should periodically review their estate plans to make sure their personal and business interests are addressed as their circumstances evolve.
Can changes in estate or tax laws affect my existing estate plan?
Yes. Changes to federal or state estate tax laws, trust regulations, and probate rules can affect how an existing estate plan works. Periodic reviews with your professional advisors can help identify whether changes in the law warrant updates to your planning documents.
