Creating your estate plan can give you a sense of relief knowing that your affairs are in order when you die or if you become incapacitated. Once the will is signed, powers of attorney are in place and any trusts are funded, it’s tempting to believe that the job is complete.
The reality is that creating an estate plan is only the first step. Your life will go through multiple phases and changes. If you fail to update your estate plan as needed, there could be unintended consequences, and you could be left without the protections the plan was meant to provide.
Don’t “set it and forget it”
Consider your estate plan as a snapshot in time. It reflects your family structure, assets and priorities as they existed when you signed the documents. For most people, circumstances change over time.
Typical life events that can affect your estate plan include:
- Marriage, divorce or remarriage
- The birth or adoption of a child or grandchild
- The death of a beneficiary, executor, power of attorney or trustee
- Significant changes in wealth
- Starting or selling a business
- Retirement or changes in long-term financial goals
If your plan doesn’t reflect any of these changes, it may no longer work the way you intended. An outdated estate plan can cause confusion and conflict. For example, beneficiaries may have died or the intended guardians for minor children may no longer be up to the job if they were needed.
You can also count on estate planning laws, tax rules and exemption limits to change over time. What made sense a few years ago may no longer be optimal or efficient today. A review of your estate plan allows you to:
- Adjust to changes in estate or gift tax exemptions
- Ensure compliance with state laws
- Take advantage of new tax planning strategies
It’s not necessary to overhaul your entire estate plan every few years. However, at least an annual review is wise.
