When should you update your estate plan? As a frequent speaker to community, support, and other groups, I get asked this question a lot. Although it depends on your specific circumstances, there are some general rules of thumb. Below are some instances where it may be appropriate to update your estate plan.
Your family expands or contracts.
If someone in your family has recently gotten married, divorced, passed away, or had children, it may be time to review your estate plan. In many instances, attorneys draft estate plans designed to withstand future changes but it never hurts to review yours when you know major changes have occurred in your family. Of course, if you are the one that recently got married, divorced, or had a child actually changing your estate plan may be in order.
Don’t forget to review your beneficiary designations. Failure to update beneficiaries can lead to unexpected or unintended consequences when you pass away. One of the most common estate planning mistakes is failure to keep beneficiary designations updated.
You know you want to make a change.
This appears self-explanatory but needs to be mentioned. If you know that you want to make a change to your estate plan, you need to follow through and make it happen. You may have decided that you want to add a new beneficiary or alter the distribution to the existing beneficiaries. Perhaps you want to change your executor. All of this requires following through and making the change.
Your assets have changed substantially.
If your assets change substantially – particularly if they increase a lot, it’s time to review your estate plan and possibly make a change. The planning options that are advisable for you may be completely different if there are major changes to your assets.
Your family dynamics have changed.
A complete estate plan involves drafting documents that may give others control of your assets if you cannot manage them yourself. When you pass away and your will is admitted to probate this person is called your executor or personal representative. You may also name others to manage your finances or make health care decisions for you while you are still living through documents called powers of attorney. If your family dynamics change, it may prompt you to change who you entrust to help you while you are alive or wrap up your affairs when you pass away.
In other instances, you may realize that someone you want to provide for has special needs. You may wish to create or re-craft your estate plan to protect both the assets and the beneficiary, particularly if the individual receives essential government benefits.
You are thinking of ‘turning things over to the kids.’
If you are thinking about making transfers of assets to your children, you need to consider your estate plan. At this juncture, you not only need to review your existing planning, but you need to consult an elder law and estate planning attorney to determine what your options are for accomplishing your goals. There are excellent planning options available to protect assets for future generations but this is a time where you must seek expert advice.
Your spouse needs nursing home care.
You may change your estate plan to protect assets in the event your spouse needs nursing home care. If you are in this position, do not feel as though you have no options. There are planning techniques that can be used to help families when nursing home care is necessary. For married couples, this usually involves changes in the estate plan for the spouse who does not need nursing facility care.
In short, it is important to review your estate plan periodically. When major changes occur in life, it is best to review your planning and decide whether changes are desirable or necessary. As we age, our goals may change. When this happens it is advisable to seek the advice of an elder law and estate planning attorney who can provide you with appropriate guidance.