Taking the time to create a comprehensive estate plan is a loving act for you and your family. Your wishes are clearly outlined, your assets are protected and your loved ones are spared from unnecessary stress during a difficult time.
However, you can’t put your estate plan in a safe place and forget about it until it’s needed. Sometimes an outdated estate plan is just as bad as no plan at all.
Why regular reviews are necessary
Your estate plan is a reflection of your life at a specific moment in time. Throughout your life, your relationships, your assets and your intentions can change. Your estate plan should evolve with them. Without a regular review of your plan, you risk your assets being distributed in a way you no longer desire, or your loved ones facing legal issues or excessive taxes.
Marriage and divorce are two life events that can significantly impact your estate plan. If you marry, you will likely want your new spouse to be your beneficiary and act as an executor. You can also authorize them as your power of attorney or healthcare proxy. The process is reversed if you divorce, as you’ll likely wish to remove their name from all your estate planning documents.
The arrival of a child is a joyful event that brings new responsibilities into your life. Your estate plan needs to reflect this by naming a guardian for your minor children if something happens to you and your spouse. You can also add your child as a beneficiary and set up trusts to manage their inheritance until they reach a certain age.
Your financial situation can change drastically over time. Any substantial increases or decreases in your net worth should trigger an estate plan review. You may acquire significant assets from an inheritance or wise investments. You want your plan to be tax-efficient so you can protect your wealth for future generations. Conversely, if your asset values have decreased, you may need to adjust how they are divided among beneficiaries.
Even if nothing changes in your life, a periodic review ensures your estate plan remains effective. Working with a legal professional is essential. They can spot issues you might miss, inform you of changes in the law and ensure your estate plan is legally sound and reflects your intentions.