Keeping your estate planning documents up to date is the best way to ensure your loved ones' financial well-being—and that your wishes are honored when the time comes.
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by Connor Beaulieu
Connor is a content strategist, journalist, and legal writer living and working in Chicago. Over the past decade, he'...
Updated on: May 3, 2024 · 11 min read
With so many other priorities and obligations in life, keeping your estate plans current has a way of falling to the bottom of the list. By periodically taking the time to update those plans, however, you guarantee that your legacy will be handled the way you want, from end-of-life care to how your assets are divided amongst those you love.
There are countless small, personal reasons to update your estate plan, but the most important will generally fall into these 10 categories:
Of all the events that might prompt a revision of your estate plans, a new marriage, divorce, or the death of your partner are perhaps the most common. More than almost anything else, changes in your marital status can dramatically affect how you want your assets to be distributed after you pass. Because of this, make sure to update your estate planning documents following any such change to reflect any new priorities or sentiments.
Whether through natural birth or adoption, the arrival of a new child in your life typically necessitates adding them to your estate plan as a beneficiary. While this may seem straightforward, keep in mind that you'll likely need to rethink how assets will be distributed among other beneficiaries to keep things fair and equal.
Beyond finances and assets, choosing the right person to act as the guardian for your minor children is a central aspect of any estate plan. As your values shift and your children mature, however, the "right person" may also change, especially if the previous guardian suffers an unexpected illness or moves far away. Make sure that your chosen guardian is the one best suited to you and your family's current needs.
For better or worse, the relationships you form with your beneficiaries may change over time. Whether this is because of estrangement, divorce, marriage, death, or any other of life's circumstances, it's important to update your estate plans to reflect the most current status of these relationships.
Whether it's a change in the assets you possess or how you'd like to see them distributed, it's all too common to adjust inheritances throughout the life of your estate plan. Not only does this ensure that your possessions end up in the right hands, but it also curtails any messy confusion or arguments that may arise when inheritances aren't clearly defined and updated.
Sometimes, your list of beneficiaries may need updates, either due to changes in your personal relationships or unfortunate circumstances. In some cases, this can mean adding a new beneficiary to receive assets after your death but may also include removing a beneficiary from consideration.
Also, it's important to update your choice of executor as your priorities, values, or needs shift. While it's entirely possible to keep the same executor from the first to the final version of your estate plans, you may find that someone else fits the role better as time goes on and your situation changes.
Any changes to your financial power (either increases or decreases) can have a significant impact on your estate planning, both in tax strategies and distribution plans. As your finances change, make sure you have plans in place to minimize any new tax liabilities for beneficiaries and maximize the amount you leave behind.
If you own a business (or even just part of a business), any changes to its structure or value generally mean revisiting your estate plan, especially when those changes could potentially raise issues of ownership after your death. Not only does this help ensure your family's financial security, but it can also ensure that your business continues to flourish after you've died.
While there are many federal guidelines to help dictate estate planning, local laws can vary wildly from state to state. Unfortunately, this means that moving to a new primary residence across state lines can necessitate a top-down rewrite of your estate planning documents. When you do rewrite, pay special attention to any laws your new home state may have regarding taxes, distribution of assets, and the probate process in general.
Even without moving across state lines, your home state may pass new legislation pertaining to taxes or the probate process. Unfortunately, it can be difficult to remain up-to-date on every piece of such legislation, so hiring an attorney to handle your estate plan and flag any change-worthy legislation changes can pay off in the long run.
Any changes to your estate plans should be done with the assistance of an experienced lawyer. Nonetheless, such changes generally fall into one of two categories: minor changes and major changes.
For relatively minor changes to your estate planning documents, such as adding a new beneficiary, you may be able to use what is known as a "codicil" to avoid rewriting your entire will from scratch. A codicil is a legal document that allows you to amend your will with specific, smaller adjustments. Some of these amendments may include:
Similar to the process needed to create a valid living will. However, a codicil must meet all state and federal legal requirements, such as being confirmed by witnesses. In order to make sure that any changes (no matter how small) don't end up becoming issues in probate court, make sure to draft a codicil under the guidance of an experienced estate planning lawyer.
When your will or other estate planning documents require more significant changes, such as large updates to your advance healthcare directive, you may be better off writing them entirely from scratch. While this is often more expensive than drafting a codicil for minor changes, it may be necessary to avoid confusion and legal hangups when the time comes. Some estate planning changes that may necessitate a full rewrite include:
Between your will, trusts, and any additional estate planning documents you may have, it can be easy to overlook little things here and there. Below, we've included a comprehensive checklist to make sure your estate plan has everything it needs.
Review current documents: Double-check the dates and versions of your current legal documents to make sure they accurately reflect your wishes.
Family and life changes: Consider any significant life changes that may impact your estate plan.
Asset inventory update: Conduct a comprehensive review of all of your tangible and intangible assets.
Liabilities check: List out and calculate any liabilities that could significantly affect your estate.
Ownership and titles: Double-check that any titles listed on your assets are correct and up-to-date.
Review executors and trustees: Confirm or modify your list of executors, trustees, and any other fiduciaries listed in your estate plan.
Power of attorney: Make sure that your power of attorney documents are up-to-date and that they comply with current state and federal law.
Tax law changes: Check for any changes in federal and state tax laws that might affect your estate plans.
Special trusts: If applicable, consider whether you need specialized trusts.
Medical directives: Make sure that your healthcare directives and living will accurately reflect your wishes.
Long-term care: Consider whether you've planned far enough ahead for long-term medical needs.
Document access: Make sure that your estate planning documents are securely stored and accessible to those who need them, such as your lawyer, executor, or certain trusted family members.
Communication preferences: When building an estate plan, it's critical to communicate the specifics of that plan to relevant fiduciaries or family members without compromising potentially sensitive information about your finances or personal life.
Regular updates: Set reminders to regularly review all documents with your estate planning attorney. While this can be at certain time intervals, you may also want reminders for major life events, such as large financial changes or a change in marital status.
While it may seem like a hassle to keep your estate plan current, letting it fall out of date can have serious effects on your legacy and the financial well-being of your beneficiaries, including:
Fortunately, keeping your estate planning documents current and accurate is made much simpler with the right estate planning attorney and support system. Rather than taking it upon yourself to remember every life event that may necessitate a change to your will, consider hiring experts to handle the matter for you. That way, you can focus on the things that matter most rather than needlessly worrying about what you may or may not leave behind.
Barring specific life events, it's typically wise to update your will every three to five years. That said, significant changes to your finances, relationships, or even where you live could prompt a check-in with your estate planning attorney.
A will and a revocable living trust are two of the most popular forms of estate planning documents, with each offering its own advantages.
To start, a revocable living trust allows you to bypass the probate process (including probate costs). This, in turn, can make for a more discreet, private distribution of assets. Additionally, a living trust outlines procedures to follow in case of incapacitation, which most standard wills cannot.
A will, on the other hand, requires relatively less oversight and offers a more straightforward, ironclad asset distribution via the probate process.
While it is by no means necessary, some people may prefer to have more than one executor for essential estate planning documents. You might, for instance, have two separate executors to oversee medical and financial decisions: one who knows your healthcare preferences and another, more financially savvy person to help distribute assets.
If you choose this option, make sure there is clear, irrefutable language in your estate planning documents outlining which executor has power over which part of your estate plans.
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