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When To Update Your Estate Plan

Posted by: at 9:06 PM on December 18th, 2013

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Having an estate plan is an essential step for adults to take. However, completing your estate plan is not necessarily a one-time process. You should periodically review your plan to make sure that it reflects any changes in your life.

Most estates will not be affected by economic factors and changes in the tax laws. However, your personal situation is bound to change.  Reviewing and making appropriate updates at least every five years will bring your plan up to date with your current situation.

Life changes can impact your current estate plan and necessitate a review of your plan.  Although inheritance tax laws have stabilized for the foreseeable future, there is always the potential for significant changes in tax laws. Checking with your attorney will help you stay on top of these.

Employment

If you or your spouse change jobs or move to a different state, you may need to make revisions to your estate plan.  Also, if you have changed beneficiary designations for any retirement plans at work, for other retirement accounts, or if you are retiring, a review and revision of your plan may be advisable.

Family

You may need to update your plan if:

  • Your marital status or that of your children or grandchildren has changed due to a marriage, divorce or death.  For example, Wisconsin and many other states have a law revoking all or part of your will if you divorce or remarry;

  • A child or grandchild has been born, adopted, or died;

  • A close family member has become ill or incapacitated, or other individuals such as your parents have become dependent on you for their care.

Changes in estate valuation

If the value of your estate has changed more than 20 percent over the last two years, you may need to update your estate plan.   If your estate is comprised primarily of retirement accounts, your plan should be reviewed.

Changes in your closely held business interest

A review is in order if you have:

  • Formed, purchased, or sold a closely held business;

  • Reorganized or liquidated a closely held business;

  • Instituted a pension plan;

  • Executed a buy-sell agreement;

  • Deferred compensation, or changed you employee benefit plans.

After major transactions

It may be wise to review your plan if you have:

  • Received a sizable inheritance, bequest, or similar disposition;

  • Made or received substantial gifts;

  • Borrowed or lent substantial amounts of money;

  • Purchased, leased, or sold material assets or investments;

  • Changed residences;

  • Changed significant property ownership;

  • Become involved in a lawsuit.

Changes in insurance coverage

Making changes in your insurance coverage may change your estate planning needs, or may make changes to your plan necessary.  Inform your estate planning advisor if you make any change to life insurance, health insurance, disability insurance, medical insurance, liability insurance, or beneficiary designations.

Death of trustee/executor/guardian

If a designated trustee, executor, or guardian dies or changes his or her mind about serving, you need to revise the parts of your estate plan affected (e.g., the trust agreement and your will) to replace that individual.

To be certain your estate plan remains responsive to your needs, be cognizant of your life changes and their potential impact to your estate.  If you should make a change in part of your estate plan (e.g., create a trust, execute a codicil, etc.), you should review the estate plan as a whole to ensure that it remains cohesive and effective.