When to Update Your Estate Plan

Having no estate plan is usually not a great idea. However, the one thing that might be worse than no plan at all - at least for a personal representative who has to deal with it during probate - is a horribly outdated plan. It’s not uncommon to open a probate action where the will is 30-plus years old, and names beneficiaries who aren’t even alive any more, or contains provisions that no longer comply with current laws. What then? Well, those are the sort of complications that can make a probate messy… and expensive. Even so, many people are surprised to learn that an estate plan needs to be updated occasionally, but it’s true. The best plan for you at age 30 is almost certainly not the best plan for you at age 80. So much can change in that time - and even in far less time - that it’s a good practice to review your plan regularly to determine whether it still lines up with your wishes.

So, with that in mind, what are some of the situations which might call for updating your plan?

Change in Assets

This is probably the most obvious one, but a substantial change in assets is often a reason to update your estate plan. If you’ve purchased a new home, new car, etc., it’s worth taking a look to see if your plan deals with that new asset the way you’d like it to. Sometimes, a new asset can throw off the balance of who-gets-what that you had initially planned, and it might take some rebalancing to get your plan back to something that seems fair to you.

Although most people don’t think of it as an asset, opening a new business is also a change that might affect your plan - particularly if you are not the only owner. Does your plan transfer your interest in the business the way you’d like - and does your business allow your interest to be transferred the way you’d like? 

Less dramatically, but just as importantly, the slow accumulation of wealth that we all hope for can dictate a change in our plans. At 30, many people have few assets, which might even be eclipsed by their debts. At 80, though, it’s much more common for people to have spent their working life building up a nest egg. As that nest egg grows in between those two extremes, it’s not uncommon for clients to want to spread it around a bit more, or make changes that reduce tax liability on their estate.

Change in Family

Another obvious one, but changes in family can have a dramatic effect on our estate plans. Births and deaths change the individuals who are able to be beneficiaries of an estate plan, and it’s not surprising that clients often change their wills when they have children or when a beneficiary dies before them. However, few people consider the effect that other people having children or experiencing the loss of loved ones might affect their plan. For example, you may have the perfect guardians lined up for your child when he or she is born, but what happens if those guardians go on to have five kids of their own? It’s possible that they may not be able to afford to care for another child, or may not have time to dedicate to them. In some cases, even changes outside of your own family can lead to changes in your estate plan.

Additionally, many people overlook the importance of changing their plans after a divorce. While it seems obvious that most people won’t want their ex-spouse to be their healthcare decisionmaker (“I don’t my ex deciding when to pull the plug!”), estate planning is typically not the hottest fire that people going through a divorce are forced to deal with. Additionally, as with births and deaths, other peoples’ divorces might affect your plan. Just as above, if you have the perfect guardians for your child in mind, but they get divorced - are they still the right choice? Maybe, but you should definitely consider your options.

Move to a New State or Country

As with divorce, people moving to a new state or country have a whole host of other issues to deal with, and updating their estate plan often gets lost in the mix. However, different states and countries all have different laws, and a plan that was perfect in your former state might produce undesirable results in your new state.

Change in Law

Even if you don’t leave your state, however, laws change all the time. Issues such as Medicaid eligibility and estate recovery, estate tax, real estate laws, etc. are all politically-charged, and changes in these laws happens on a regular basis. Of course, you didn’t go to law school, and it’s not your job to keep up with all these topics. That’s what you hired a lawyer for, so lean on your lawyer to help you determine if these changes require an update to your plan.

Change in Wishes

Lastly, people’s wishes often change throughout their life. We’re always forming new relationships with new people, old relationships change; our values change; we discover new passions and interests throughout our life; and so on. Simply put, maybe you want to donate all your assets to an animal rescue organization at age 30, but by age 80 you might be more concerned with your grandkids’ education. If you take a look at your plan and have reservations about where your assets will go, it might be that your wishes or values have simply evolved, and it’s time to update your plan to reflect that.

Of course, this is not a comprehensive list, and there are any number of things that can cause an estate plan to need updating. Our recommendation is that clients review their plan every one to two years, or when major life events like the ones above happen. It takes 30 minutes or so, ensures that your current wishes are honored, and can save a huge amount of stress for your loved ones when the time comes to execute your plan. Of course, we can help with the process of determining whether your plan needs updating - and help you update it, if it does. Contact us today to get started.