When Should You Update Your Estate Plan?

An estate plan is designed to help protect your assets, communicate your wishes, and provide for the people who matter most to you. However, creating a will, establishing a trust, or signing a power of attorney does not necessarily mean your planning is complete for the rest of your life. It is not a one-and-done type of situation. Changes in your family, finances, health, and personal priorities can affect whether your existing documents still reflect your wishes.

Updating an estate plan periodically can help ensure that your assets are distributed according to your intentions. You also want to make sure the right people are authorized to make decisions on your behalf and that your loved ones understand how to handle important matters if you become incapacitated or pass away.

Although there is no single schedule that works for everyone, certain life events should prompt a review of your estate planning documents. 

Marriage or Divorce

Marriage can change your financial obligations and the people you want to provide for after your death. If you marry, you may need to revise your will, trust, beneficiary designations, and powers of attorney to reflect your new circumstances.

Divorce is another important reason to review an estate plan. You may no longer want your former spouse to inherit your assets or make financial and medical decisions on your behalf. However, divorce does not automatically change every estate planning document or beneficiary designation. If you are separated or in the process of divorcing, legal restrictions may affect the changes you can make before the divorce is final.

Birth or Adoption of a Child

Having a child introduces new responsibilities and considerations. Parents should review their wills to determine whether they have nominated a guardian to care for minor children if both parents die or become unable to provide care.

Parents may also want to establish a trust to manage inherited assets until a child reaches an appropriate age. Without careful planning, a minor child who inherits property may require a court-supervised arrangement to manage those assets. An estate plan should also address what happens if a child has special needs or requires long-term financial support.

Death of a Spouse, Beneficiary, or Executor

When someone named in an estate plan dies, the documents may need to be revised. For example, if your spouse was designated as the primary beneficiary or executor of your will, you may need to identify someone else to fill that role.

The death of a beneficiary may also affect how assets are distributed. Reviewing the plan can help ensure that your property passes to the people you currently intend to benefit.

Relationship Changes

Even if nobody dies, your relationship with a certain person may change over time. You may become estranged from a relative, develop a closer relationship with someone else, or decide that a beneficiary needs a different type of financial arrangement.

You should also periodically assess the people named as executors, trustees, guardians, and agents under your powers of attorney. These roles can involve significant responsibilities, so the individuals you choose should be willing and able to carry them out.

Moving to Another State

Estate planning laws differ among states. If you relocate, your existing will or trust may remain valid, but provisions involving property ownership, taxes, powers of attorney, and health care directives may need to be reviewed and updated. A move can also affect how real estate is treated, so check with an attorney if you are unsure of the rules. 

What Should You Review?

An estate plan often encompasses multiple documents. Here is what you should be reviewing:

• Last will and testament: Review beneficiaries, asset distribution, executor and guardian nominations.
• Revocable living trust: Review successor trustees, beneficiaries, distribution instructions, and trust funding.
• Durable power of attorney: Confirm who can manage your financial affairs if you become incapacitated.
• Advance health care directive: Review your medical preferences and the person authorized to make health care decisions on your behalf.
• Life insurance and retirement beneficiaries: Verify that the named beneficiaries are current and appropriate.
• Business succession plan: Review who will manage, inherit, or purchase your business.
• Digital asset instructions: Ensure authorized individuals can access and manage your online accounts and digital property.

So How Often Should You Update Your Estate Plan?

A practical approach is to review your estate plan annually and arrange a more thorough review every three to five years, or sooner if a significant life event occurs. The appropriate schedule depends on your family situation, finances, and the complexity of your plan.

During a review, consider whether:

• Your intended beneficiaries are still correct.
• Your chosen executor, trustee, and agents remain appropriate.
• Your assets and debts have changed significantly.
• Your documents reflect your current wishes.
• Your beneficiary designations match your overall estate plan.
• Changes in the law may affect your arrangements.

FAQs

Q: What happens if I never update my estate plan?

A: An outdated estate plan may distribute your assets according to wishes you no longer hold or name an executor, trustee, or agent who is no longer appropriate for the role. It may also fail to account for new family members, assets, or changes in applicable laws.

Q: Do I need an attorney to update my estate plan?

A: You may be able to make certain changes yourself, depending on the document and applicable state law. However, working with an estate planning attorney can help ensure that revisions are legally valid and consistent across all documents. 

Q: Do beneficiary designations need to be updated separately?

A: Yes. Life insurance policies, retirement accounts, and certain other assets may pass directly to named beneficiaries rather than through your will. Updating your will or trust does not change these designations. Review each account and policy individually to ensure the beneficiaries are accurate.

Contact Us Today

Estate planning is not a one-time deal. It is something that requires ongoing maintenance and must be revisited regularly.

Ready to plan your estate? Contact the Louisville estate planning lawyers at Dixie Law Group, PSC. Our experienced team can walk you through the ins and outs of an estate plan. Schedule a consultation with our office today by calling (502) 273-5178.