A lot of time and thought is put into your estate plan to limit costs and provide for a smooth transition for your family upon your death. However, while your estate plan may have been effective in accomplishing these goals when it was made, it could now be out of date. It is very important to review your estate plan every three to five years, or upon a major life change, to ensure it still accurately represents your goals.
Some common major life changes that may affect your estate plan include:
Marriage
Upon marriage, you may wish to update your estate plan to provide for your spouse in the case of your death. Your new spouse may become a beneficiary, executor, or trustee. If this is not your first marriage, you may want to update your estate plan to ensure certain assets go to your children or family, not your new spouse.
Divorce
When a marriage ends, your estate planning objectives likely change. You should update your estate plan to reflect this by removing your ex-spouse as a beneficiary, executor, trustee, etc.
Birth
When you have a child, you should update your estate plan to provide for your child in the case of your death. An estate plan can protect and provide for your child upon your death by allowing you to choose a guardian and also set up a trust to provide for your child and protect your assets for them until they are of age.
The birth of a grandchild is also a reason to review your estate plan. You may wish to make your grandchild a beneficiary or create a trust for the benefit of your grandchild.
Child Coming of Age
When your child turns 18, you will need to update your estate plan to reflect this. You no longer need to name a guardian for them and may not wish to provide for them through a trust. In addition, you may want to name them as an executor or trustee.
Death
The death of a spouse, beneficiary, executor, or trustee necessitate a change in your estate plan. You will need to remove this person from your plan and appoint replacements. You may need to change a beneficiary or appoint a new executor or trustee.
Move to a Different State
While the laws governing estate planning differ from state to state, each state generally honors an estate plan created in a different state. However, upon relocation to a new state, it is important to have an attorney review your estate plan to make sure it is valid and will be honored in your new state of residence.
Change in Estate Tax Law
Your estate plan was created to minimize the tax liability of your estate upon your death, in accordance with the tax laws in place at the time the plan was created. A change in estate tax law may change the liability of your estate and require a new plan to minimize this liability.
An estate plan is not intended to last a lifetime; it must be reviewed and updated every three to five years, or sooner upon a major life change, to fit your goals. The events listed above are not comprehensive, but provide an idea of what type of major life changes warrant a review of your estate plan. If you question whether a life change may affect your estate plan, feel free to contact one of the attorneys in our estate planning division, Tom Carpenter, Bob Thomson, Craig Shannon or Heather Timmins to determine if an update to your estate plan is necessary.