Is It Time to Update Your Estate Plan?

Few people take the initiative to create a will or trust, so if you’ve gotten that far, you’re more prepared than the majority of people in the United States. While having these plans in place is a vital part of estate planning, these documents aren’t just a one-and-done deal. Updates are necessary to keep wills and trusts relevant and truly reflective of your wishes.

Why Should You Update Your Will or Trust?

If you were to pass away with dated information in your will or before adding new assets to your trust, then the risk of complications and challenges increases significantly. All the time you spend planning will be for naught if changes aren’t reflected in your estate plan. 

Many people make the mistake of conveying their wishes verbally to their loved ones, thinking they can take care of the details when the time comes. However, simply stating your new preferences aloud to your family members isn’t sufficient. In fact, if your loved ones know you changed your mind about the terms of your estate planning documents, but those changes aren’t reflected in the documents themselves, this can be heartbreaking for your family and friends to know your true wishes cannot be honored.

When you decided to create a will or a trust for your estate, it was likely with the intention of maintaining control over your assets and property after your death and providing for your family. It might be time to revisit your estate planning documents because, without regular updates, your priorities and your family may not be protected as well as you intended.

When Should You Update Your Estate Plan?

The general rule of thumb is that you should revisit your estate plan every few years to assess the terms based on your current life and mindset. Everyone changes as they age; this is expected, and it’s a good thing. Very few people can say that their current wishes and opinions are the same as they were fifteen or twenty years ago. 

That sentiment applies to your estate plan, too. If you create a will at age 35 or 40 and live to be 80 or 85 years old, how accurately do you think that document will reflect your wishes? It’s probably still valid but almost definitely not relevant anymore.

Aside from timely reviews every three years or so, you are also strongly encouraged to make amendments following any major life changes or events. Any time your assets increase or decrease, and whenever your beneficiaries change, you should update your will or trust to reflect that. The following are typical examples of when estate planning documents should be revised:

–        Birth or adoption of a child or grandchild 

–        Death of a family member or loved one

–        Opening of a new financial account

–        Relocation to a new state

–        Sale or purchase of real property (homes, land, etc.)

–        Marriage or divorce

–        Significant change in family dynamics

Some of these scenarios may provide self-explanatory reasons for an update to your will or trust. When you add new assets or property that you want to be distributed to your heirs or beneficiaries, it is important that you include this property in your will or add it to your trust. A new baby or another family member often means adding a beneficiary to ensure property division is correct.

What happens if you relocate to a new state? If you purchase or sell property, you may have guessed that you’d need to make adjustments to your estate plan. Did you know that you need to revise these documents even if you didn’t purchase or sell any property? Regulations vary from state to state, so it’s a good idea to go over your new state’s laws, review tax requirements, and make sure everything is still valid. 

Federal law often requires states to honor laws from other states in situations like this; it is a concept referred to as full faith and credit. However, probate laws can render parts of your will invalid or make the execution of other estate plans challenging. Taking extra precautions to ensure a smooth transition of property can occur is often the best plan, and you can accomplish this by reviewing your documents if you move out of state.

Changes in family dynamics may also create the need for an update. This can be any number of things, including estrangement of family members or changes in domestic partnerships. It may also be a good idea to evaluate whether or not receiving an inheritance continues to be in your beneficiaries’ best interests. For example, if you have a loved one who is struggling with drug misuse or gambling addiction, receiving a large sum of money might end up causing more harm than good. 

Financial situations also change over time. Thinking about the economic situation of your beneficiaries can help you assess whether your planned distribution is still the right approach. What does this mean? Consider the following example:

When James created his original will, he was leaving 15% of his estate to his nephew and 15% to his granddaughter. Ten years later, his nephew signed an NFL contract giving him an annual salary of $2,000,000 for three years. At that time, James’ granddaughter gave birth to twins shortly after losing her husband to cancer. Because of these changes in their circumstances and financial statuses, James decided to revise his will to give 5% of his estate to his nephew and 25% to his granddaughter. 

No one’s life stays exactly the same over time, and it is because of these inevitable changes that updating your plans for the future must happen every so often. If you’re ready to review and revise your will or trust and want help from an experienced estate planning lawyer, call Warren & Migliaccio for a free consultation.