Creating an estate plan can be time-consuming, but it provides a sense of relief once it’s complete. You know your loved ones will have financial security and your assets will be managed and distributed according to your wishes.
However, an estate plan can become outdated. In some cases, that can be almost as bad as not having an estate plan at all.
Your life in stages
Your life has been a series of changes and events from the day you were born. Your life at 50 and 60 looks different from when you were in your early 20s. An estate plan should reflect your life’s circumstances. Some key events that should trigger a review of your plan include:
- Marriage or divorce: A spouse or ex-spouse means changing how you will want your assets distributed upon your death. It may also require changing your power of attorney (POA), healthcare proxy, executor and life insurance beneficiary.
- A new child: If you have recently welcomed a new child into your family, you will want to name a guardian to care for them in the event of your death, along with creating a trust to ensure they are financially secure.
- Death: If someone you named in your plan passes away, such as the executor, POA, trustee or beneficiary, you must remove them and appoint someone else.
- Financial changes: An inheritance, starting or selling a business or any other significant change in finances requires an update to reflect your new financial situation.
- Moving: If you have relocated to another state or country, you will want to review your estate plan to ensure it complies with your new location.
In addition to changes in your life, federal and state regulations can also change. Reviewing your estate plan can ensure it takes advantage of the newest estate tax laws.
Not updating your plan can lead to confusion and family disputes. There can be delays in settling your estate and it could entirely omit loved ones while distributing assets to people no longer in your life. By reviewing your estate plan regularly, you can ensure that it fulfills your intent of providing financial security to the people you love.
