Many people complete their estate planning documents, place them in a safe/drawer, and never think about them again. It’s an understandable pattern, but estate planning requires maintenance just like your house, your car, and the rest of your valuable assets. So when should you review and update your will or trust?
In a perfect world, people would review their estate planning documents annually but a more attainable goal is to review your documents every 3-5 years (regardless of life events), or earlier if there is a significant change in your circumstances. The most apparent reasons to revisit your estate plan is when you change your mind about the gifts being made, the people receiving gifts, or the people you appointed to make decisions (e.g. power of attorney or trustee). Some less obvious life changes that may warrant a review of your estate planning include:
- Marriage, remarriage or divorce: Marriage changes just about everything in your life. Your estate plan is no exception. Whether your marriage is beginning or ending, you should review your documents to ensure your existing plan still meets your goals.
- Birth or adoption: Like marriage, kids change our lives and often change our ideas about what is important. Even documents that plan forward for the possibility of future kids should be reviewed to confirm that a new addition to the family does not modify your ideas or plans.
- Empty nest: As our children grow and mature our ideas about what gifts we want to leave them or how we want to leave those gifts often change.
- Change in tax laws:Tax laws change over time. An estate plan that had proper tax planning in 2009 may be unduly complex and burdensome under 2019’s higher exemption amount, and may even result in worse tax treatment than if you had no tax planning.
- Living in a new state: On the bright side, most wills/trusts that are properly executed in one state will be honored when you move to a new state. Unfortunately, out-of-state documents rarely capitalize on the planning benefits available in your new state, and may result in unnecessary costs and delays after your passing. Worse still, private institutions in the new state may hesitate or even refuse to honor your financial power of attorney or medical power of attorney because they look different than what they are used to seeing.
- Buying land: Land ownership can have a major impact on your plan. A plan that is properly tailored when you only owned your home in The Woodlands may prove woefully inadequate after you purchase an out-of state vacation house.
- Significant changes in the value or complexity of your assets: Buying, selling or changing the structure of your business, making significant changes in your investment assets, and/or increased or decreased risk of legal liabilities are all issues that should be contemplated in your estate plan. Consequently, significant changes in those variables may warrant changes to your plan.
If your life has undergone a significant change since the last time you reviewed your estate planning documents then it’s time to dust them off and look them over. If your review raises questions about how your plan works or how one of these issues might impact your plan, then you should get in touch with your estate planning attorney to make sure your plan is properly suited to your life as it exists today.