How Often Should You Review Your Estate Plan?
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You drafted a will with your attorney, and then you filed it away and promptly forgot about it. In fact, maybe you forgot about it for decades! Many people assume that drafting a will is a one-time event; but it really is only the first step in the process. The truth is that you should review your estate plan for necessary changes on a regular basis, and when major life changes occur.
Every adult should have a comprehensive estate plan. Oftentimes, people draft their first will when they get married or have a child. Then, they file it away and forget about it. Unfortunately, many individuals let an estate plan sit unchanged, even if their lives have changed significantly, causing unintended negative consequences for families. You should review your estate plan every couple of years, and definitely after certain major life-changing events, such as getting married or divorced.
Getting Married or Divorced
Most states have laws that automatically provide for a spouse upon your death, or that automatically disinherit a spouse upon a divorce. However, the law does not automatically change other estate planning documents.
If you get married, you may want to create a trust with your spouse. You may name your spouse as your power of attorney; or the beneficiary for your financial accounts and insurance policies. If you get divorced, you may need to change these documents in order to achieve new goals and objectives.
If you get remarried and have children from a previous relationship, it is especially important to update your estate plan. You want to make sure that your estate plan adequately reflects your wishes. For example, you may want your estate divided between your children and your new spouse. Or you may want your estate to go entirely to your children.
When you have children, it is wise to update (or create) your estate plan. You can include your children as beneficiaries of a trust or bequeath property to them in your will. You can name a guardian for your child or children should something happen to you and your spouse.
The Nature of Your Estate Changes
As you build wealth, and acquire a house and other real property, you may need a more sophisticated estate plan. This can include creating a trust, and transferring your property into the trust, for better lifetime control. Of course, you can also leave your estate to your children, through the trust, in order to avoid probate.
As your affairs become more complicated, you may need to update your power of attorney and or successor trustee choices to ensure that the designated person has the necessary financial knowledge to properly manage your assets and handle your affairs.
Executing Changes to Your Estate Plan
When you review your estate plan and determine that you need to make changes, your attorney can help identify the best way to do so. In some cases, you can draft additional provisions, and attach them to your will, as a codicil. Other times, you may need to draft an entirely new will. If you have a trust, and you get divorced, you may need to make changes to the trust beneficiaries and trustees. If you have a joint trust with your spouse, you may need to revoke the trust and create a new one in your name only. These are just a few examples of how to execute changes to your estate plan.
Many different life changes can occur; so, it is important to stay in touch with your attorney and evaluate your options.