Estate planning is a crucial aspect of managing your financial and personal affairs. It ensures that your wishes are carried out and that your loved ones are taken care of after you pass away. However, simply creating an estate plan is not enough; it’s equally important to review and update it regularly to reflect any changes in your life circumstances, financial situation, or relevant laws.
Review After Major Life Events
Certain life events can significantly impact your estate plan. The experienced estate planning lawyers at TdD Attorneys at Law recommend reviewing and updating your estate plan following these key changes:
Marriage or Divorce
When you get married, your priorities and beneficiaries might change. You’ll likely want to include your spouse in your estate plan, update beneficiary designations, and perhaps adjust how assets are distributed. On the flip side, a divorce necessitates removing an ex-spouse from your estate plan to avoid unintended inheritance.
Birth or Adoption of a Child
Welcoming a new child into your family is a significant event that should prompt a review of your estate plan. You’ll need to ensure that your child’s financial needs and guardianship arrangements are well planned.
Death of a Beneficiary
If a person named in your estate plan passes away, you’ll need to update your document to reflect their absence. This ensures that your assets are distributed according to your current wishes.
Regular Periodic Reviews
Even if there haven’t been significant life changes, it’s wise to review your estate plan periodically. Many experts recommend reviewing your estate plan every three to five years. This helps to make sure your plan still aligns with your current goals and financial situation.
Changes in Financial Situation
Your financial situation can evolve over time due to promotions, business successes, investments, or even inheritances. Each of these can have a considerable impact on your estate plan. Every time you experience a substantial change in your financial status, it’s essential to review your estate plan to ensure that it reflects your new circumstances.
Increase in Wealth
If you’ve experienced a significant increase in your wealth, you may want to allocate more to your heirs or change charitable donations. This might also prompt tax planning considerations.
Debt Accumulation
Conversely, if you’ve accrued significant debt, you may need to update your estate plan to consider how these liabilities will be managed after your death.
Changes in the Law
Estate laws and tax regulations are subject to change. Whenever there are adjustments in state or federal laws related to inheritance, estate taxes, or trust regulations, it’s crucial to review and possibly update your estate plan.
Health Changes
Serious health changes, either for you or a dependent, can necessitate a closer look at your estate plan. Chronic illnesses or conditions affecting mental capacity must be addressed to ensure living wills, healthcare proxies, and power of attorney documents are in order.
If you haven’t already, changes in health might prompt the need for long-term care planning. This can involve setting up trusts or other financial mechanisms to cover medical expenses and ensure you receive the care you need.
Estate planning is not a one-time task but an ongoing process. Regular reviews and updates are necessary to reflect the changes in your personal and financial life, as well as shifts in the legal landscape. Taking the time to periodically review your estate plan will provide peace of mind and ensure that your wishes are honored and your loved ones are provided for in the future. Ensure you have a systematic approach to reviewing your estate plan, including setting reminders and consulting with professionals when needed.
