Making an estate plan should not be done once and stored away until death. Changes in your life and the law could make an unchanged plan ineffective.
When to update
Your estate planning documents should be reviewed for needed updates every three to five years. There may be many changes in your life and tax and estate laws that require updates to your plan.
It is also important to review the individuals you selected as an executor, power of attorney, health care agent and successor trustee. They may no longer be able to serve because of death, age, relocation, or unwillingness. Determine whether you feel they are still the individuals you want to serve in any of these roles.
You may have named guardians for your children who are now adults. Like evaluating other individuals who play a role in your estate, determine whether you want these individuals to serve as guardians.
Tax and other laws covering trusts change periodically. In 2011, for example, the tax law changed so the surviving spouse may preserve the deceased spouse’s tax exemption for later use without having to divide the assets into two separate trusts. Trusts should be reviewed to determine whether its asset splitting formula applies to your situation.
Situations that underlie the creation of the trust also change. For example, a beneficiary may now have a substance abuse problem or undergoing divorce and should not receive assets outright. Or a beneficiary may have matured or become more responsible since the trust’s creation and can now receive assets outright.
Assets from annuities, life insurance, IRAs and pensions plans go to their designated beneficiaries despite what is contained in a will. Their assets may go to an unintended beneficiary, such as a former spouse, if they were completed long ago, filed away, and forgotten.
Designations should be reviewed to assure that the contingent beneficiaries are current. Consider adding other beneficiaries such as children that were born since the designations were made or a new spouse.
Review is also a good opportunity to determine whether beneficiary forms are complete and accessible.
Attorneys can assist you with developing an estate plan that addresses your needs. They can also help you periodically evaluate and revise it.