Top 10 reasons to update your estate planning documents

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.

10 reasons to keep your will and estate plan current

There are countless small, personal reasons to update your estate plan, but the most important will generally fall into these 10 categories:

1. Changes in marital status

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.

2. New children

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.

3. Choosing legal guardians

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.

4. Changing relationships with beneficiaries

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.

5. Inheritance adjustments

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.

6. Beneficiary or fiduciary changes

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.

7. Personal finance 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.

8. Business changes

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.

9. Moving across state lines

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.

10. Changes in state or tax law

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.

How to update your estate planning documents

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.

Minor 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:

1. Changing executors: Changing the person in charge of executing your estate plan
2. Changing beneficiaries: Minor adjustments to beneficiaries, such as adding or removing a beneficiary because of marriage, death, or other life events
3. Specific bequests: Modifying, adding, or removing specific bequests
4. Appointing guardians: Updating the guardian for your minor children if your previous choice is no longer fit for the role
5. Changing trustees: Similar to swapping out an executor, you may need to update the list of trustees included in your will

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.

Major changes

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:

1. Major changes in asset distribution: For larger or more general assets, an entirely new document may increase clarity during the probate process.
2. Complicated family relationships: If serious changes occur within the structure of your family, such as a messy divorce or an unexpected death, it may be best to draft new estate planning documents.
3. Moving to a different state: In order to comply with state law, you may need to draft an entirely new set of estate planning documents when you move states. Doing so can help you avoid fees, penalties, or unnecessary tax liabilities.
4. Significant financial changes: If your net worth dramatically changes, it may impact your tax liability and how your asset distribution should be handled.
5. Complete overhaul of trustees or executors: For any changes more complex than swapping out a single individual, such as naming a new set of executors with specific duties, a full rewrite of your estate plan is typically recommended.
6. Changing estate plan structure: If you decide to switch from a will-based estate plan to one that primarily uses trusts or other such structures, a full rewrite will be necessary.

Estate planning checklist

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.

Personal review

Review current documents: Double-check the dates and versions of your current legal documents to make sure they accurately reflect your wishes.

• Last will and testament
• Revocable living trusts
• Irrevocable trusts
• Durable power of attorney
• Healthcare power of attorney
• Living will/advance healthcare directive
• Guardianship designations
• Business succession plans
• Funeral arrangements

Family and life changes: Consider any significant life changes that may impact your estate plan.

• Marriages or divorces
• Births or adoptions
• Deaths in the family
• Changes in health conditions
• Moves (especially across state lines)
• Changes in relationships with the people named in your documents

Financial review

Asset inventory update: Conduct a comprehensive review of all of your tangible and intangible assets.

• Real estate properties
• Business interests
• Bank accounts
• Investment accounts
• Retirement accounts
• Life insurance policies
• Personal property (art, jewelry, collectibles)

Liabilities check: List out and calculate any liabilities that could significantly affect your estate.

• Mortgages
• Loans
• Other debts

Ownership and titles: Double-check that any titles listed on your assets are correct and up-to-date.

• Beneficiary designations: Review and update your beneficiary choices on relevant documents.
• Retirement accounts, such as IRA and 401(k)
• Life insurance policies
• Annuities
• Payable-on-death accounts

Legal and tax considerations

Review executors and trustees: Confirm or modify your list of executors, trustees, and any other fiduciaries listed in your estate plan.

• Assess their ability and willingness to serve in the role
• Outline potential alternates

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.

• Special needs trusts for disabled beneficiaries
• Generation-skipping trusts
• Charitable trusts

Healthcare and end-of-life decisions

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.

Digital estate planning

• Digital assets: Include instructions on how to manage and access your digital assets.
• Social media accounts
• Digital currencies
• Online businesses
• Digital files

Miscellaneous

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.

Setting reminders

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.

What happens if I don't update my estate planning documents?

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:

• Legal challenges: In the event that you pass away with an outdated or incomplete estate plan, you may leave the door open for family members to contest your will. This, in turn, can potentially lead to lengthy legal disputes that stress family relationships and delay beneficiaries from receiving the assets you left behind.
• Wasted money: On top of the additional attorney fees associated with a will in dispute, an out-of-date will may also fail to capitalize on the latest tax laws or estate planning strategies.
• Legislative issues: Beyond tax law, failing to update your estate plan after you've moved to another state may greatly complicate the probate process and determine whether your assets are distributed as you would want.

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.

FAQs

How often should I update my will?

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.

How is a will different from a revocable living trust?

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.

Should I have more than one executor?

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.