Review Your Estate Planning Documents Every Year
Estate planning documents are the foundation of your estate plan. They establish you as a trustee, designate heirs to inherit from you, and provide instructions for what should happen if you become incapacitated or die without a will. Estate plans can also include other financial instruments such as trusts, wills, or life insurance policies.
Think about it
The annual review enables trustees to make changes such as updating beneficiary information as needed in order to maintain the desired outcomes created by an original document such as a trust agreement or probate court orders that set forth who inherits assets upon death according to state law.
Annual reviews may not be necessary for some families where one spouse has died with no children and the second spouse is living only long enough – like three years -to qualify for Social Security benefits.
How To Update & Review Your Estate Plan
Look at your estate planning regularly. Check it every three to five years or when there is a significant life event. Consult your solicitor or financial advisor for assistance.
Let’s have a closer look
Examples of Life Events:
- A birth or death in the family
- When your child reaches adulthood
- When your grandchild needs finances for education
- Getting married or divorced
- Buying a home
- Taking a huge loan
- Changes to tax laws
- Starting a new job or starting your own business
- Increases or decreases in the value of your assets
- Changes in your insurance coverage
If you review your estate plan regularly, you can rest assured that your estate will be distributed with ease to your beneficiaries1.
Reasons to Update Your Estate Plan
- To remove unnecessary assets from your estate.
- To reduce or eliminate probate expenses and taxes.
- For peace of mind in knowing that you have provided for loved ones, friends, family members, and charitable organizations through a will or trust agreement.
If there is no written plan for the distribution of assets after death, an individual’s property must go to his/her closest living relatives by state law without consideration as to what they would want with it.
The process can be costly and time-consuming if all heirs are not clear on this issue before their parent dies.
Many people do not realize how easily wills can become outdated over just a few years due to marriage, divorce, childbirth, and children moving out of the home
The Process of Updating Your Estate Plan
Throughout the year, there are many changes that can affect your estate plan – marriage, divorce, childbirth, and children moving out of the home. You may have also experienced a significant change in finances due to retirement or taking on responsibility for aging parents.
But the bottomline is this
The process of updating your estate plan is not difficult but does take time as you will need to update beneficiary designations from life insurance policies, retirement plans IRA2), and financial accounts.
When should I update my estate plan?
Since updating your estate plan is not an event that can happen overnight, it’s best to stay on top of the latest updates and strategies. Estate planning should be a priority for anyone who has accumulated any significant amount of wealth in their lifetime.
As we age, our priorities change, which means there may come the point when you want some of your money or assets distributed than they are now.
How often should the estate plan be updated?
Some estate plans will require updates yearly, and others might only need to be updated every three or four years. It all depends on what assets are being managed and the changes that occur over time with those particular assets.
How do I know if I need to update my estate plan?
There are many signs to look out for, but the best way is by engaging in a conversation with an estate planning attorney.
What will happen if I don't keep my estate plan updated?
Without taking the necessary steps, you could be at risk of paying higher taxes and other penalties down the line that could have been avoided with proper planning ahead of time.
Failure to update those plans can also lead to unnecessary confusion during a difficult period in your life, such as illness or death. And this is before considering long-term care costs, which only become more expensive as we age. These matters should not be taken lightly!
Now go out and do it!
Reviewing & updating your estate plan is very important. Checking it at regular times will ensure that your beneficiaries will be well looked after. Estate planning can help you to avoid paying inheritance tax² and make sure your beneficiaries are well looked after.