If you have an estate plan in place, you may feel good about your accomplishment and forget that it exists. You need to remember that estate planning is not a one-time set-and-forget task. Life circumstances and laws change. Estate planning attorneys recommend you revisit and update your estate plan periodically and when you have any life change.
Estate planning documents that need updating
Basic estate planning documents you need to update include:
- Your will
- Revocable living trust
- Any other trust you have established
- Health care directive
- All powers of attorney
- Your life insurance and retirement plan beneficiaries
- Your business plan if you own a business
If nothing changes in your life, an estate planning attorney will work with you to review all these documents at least every three to five years. In addition, there are life events that trigger the need for reviewing and updating your estate plan. Your attorney will ensure the changes are valid and compliant with state and local laws.
When you get married
A new marriage generally means you will add your new spouse as a beneficiary, which means you must update your will and other documents to include your spouse. State laws change, and not all states have the same rules regarding beneficiaries. If you do not name your spouse specifically, he or she may not receive what you want them to.
When you get divorced
Your ex-spouse may still be listed as your beneficiary in your estate plan documents. You may want to change this, especially if you have remarried.
You may want to still provide for your ex, just not in the same way as making the ex the beneficiary of all your estate. Your divorce settlement may require you to maintain your ex as a life insurance policy beneficiary. Be sure any changes you make are consistent with that settlement agreement.
When you have a child
Whether you adopt a child or have a biological child, this is the ideal time to update your estate plan. Specifically, you need a will that names a guardian for your minor children. If you do not do this, the court will name a guardian, and it may not be someone you would like to care for the children.
This is also the time to consider placing assets into a revocable living trust for the benefit of your children. You can appoint a trustee to make sure the children receive the assets according to your wishes stated in your trust.
When you have stepchildren you want to provide for
If you want to provide for stepchildren as beneficiaries, you must specifically say so. Naming your “children” as beneficiaries in your estate plan provides for your biological and adopted children but does not include stepchildren. You must specifically name the stepchildren in order for them to inherit any of your estate.
When you want to change beneficiaries
If you want to disinherit someone, state this in your estate documents and change the beneficiary. You need to change a beneficiary if that person has died since you will want to redistribute your assets among your living beneficiaries.
Should any loved ones, like your children, develop care needs since drafting your estate plan, you might consider establishing a trust to ensure their care continues after your passing.
When you buy a home or other real estate
If you have a revocable trust, you may want to add the home or real estate to the trust, designating the trust as the property owner. If you do not already have a trust, this may be the time to create one. An estate planning attorney will help you with this.
When your spouse dies
If your spouse dies, you are likely the major beneficiary of most of his or her property, including any retirement plan or insurance policy. You need to update your estate plan to account for these new assets. Depending on your age, if you are the beneficiary of your spouse’s retirement account, you may want to leave the account in your spouse’s name.
Additionally, if your spouse was named as your agent in your powers of attorney or health care directive, you must create new documents naming someone you trust to replace your spouse as your trusted person.
When your financial situation changes
Whenever you sell an asset or gain a new one, you want to revisit your estate plan and either add or delete the asset from your plan. If you gain an asset, you may want to transfer the deed to your revocable trust or decide if you want to transfer the asset to beneficiaries through your will.
These are just some reasons for reviewing your estate plan. Check with your estate planning attorney for more suggestions.
