3 Reasons To Update Your Estate Plan

So, you already have an estate plan–congratulations, you’re well ahead of most people. However, an estate plan is not a set-it-forget-it undertaking–it will still require some maintenance and updating to ensure that it continues to reflect your evolving life circumstances. 

The question now is, when do you need to change or update your estate plan? This article shares significant milestones or life events that should be enough reason to revisit and update your estate plan. 

1. You Moved To Another Place

Moving to another state or city might require creating new estate plan documents. In particular, you want to give special consideration to the following:

• Name A New Executor

Typically, you can name a family member or relative as executor of your will. However, if you nominate a lawyer from your previous home as an executor, it may be advisable to choose a new one. This is because some states impose restrictions on who can serve as your executor. Although some states may allow out-of-state executors, additional requirements are imposed on them, such as requiring them to post a bond, an insurance policy protecting the beneficiaries. 

Therefore, it’s better to name an executor who resides in your new state. This way, they will encounter fewer hassles than those working remotely. If you recently relocated to the area, consider engaging the services of a Longmont will and trust attorney to assist you in replacing your executor. 

• Powers of Attorney

Generally, most states accept healthcare directives and power of attorney documents from other locations. However, if possible, it would be best to use your current state’s forms to create new records. Remember that some medical providers and financial institutions may hesitate to accept a form that doesn’t look familiar to them. 

• Property Rules

Moving to a new state necessitates your estate plan adapting to the new property laws. In addition, if you’re married, rules regarding marital property may also differ in your new state, so you should consider making a new will. 

2. Relationship Changes

Over time, romantic relationships and family dynamics can change significantly over the years. Maybe you’ve become a new parent. Have you named a guardian for them in case you and your spouse pass away suddenly?

Perhaps your sibling or favorite nephew rarely contacts you anymore. You may have ended a relationship, or maybe a second marriage has brought new people into your life. Grandchildren and great-grandchildren who aren’t listed in your will may have arrived. Perhaps one of your beneficiaries has passed away? If a favorite niece or one of your children has reached legal age, you may want to name them as executors or revise specific bequests.

Following these significant changes, it is essential that you reevaluate your estate plan, regardless of the nature of the alterations to your relationships and beneficiaries. 

3. Significant Fluctuations In Your Financial Situation 

The economy goes through ups and downs, and so is your financial situation. Thus, you should consider reviewing your estate plans whenever your net worth changes significantly. 

For instance, if you’ve obtained substantial assets since creating your estate plan, check if it’s still the best option for your circumstances. Generally, a will should work well for most people; however, it doesn’t keep your assets out of probate. 

If you’re expecting to be subjected to estate tax in the future because you own a business, consider talking to a lawyer about estate tax planning. With thorough planning, you can shift some of your wealth to your family members and minimize hefty estate taxes. 

Conversely, suppose you’ve had a financial setback and acquired significant debts. In that case, you’ll need to consult your lawyer to help create a plan that reduces the burden on your loved one if you die or even keep specific assets out of creditors’ hands. 

Moreover, regardless of whether your financial status improves or worsens, you must ensure that your estate plan reflects how you want your estate distributed. For instance, if you have a $1 million estate, and your initial plan specifies that the USD$100,000 be donated to a charity and the remaining USD$900,000 be divided equally between your spouse and two children. This would result in USD$300,000 for each of them.

But what if your financial circumstances unexpectedly deteriorated and the value of your estate dropped to USD$160,000 today? If you pass away tomorrow, the charity will receive USD$100,000, and your family members will receive only USD$20,000 each. This proves that reevaluating and updating your estate plan is necessary.

Takeaway

As your life continues to change and evolve over the years, so should your estate plan. Changes in family relationships, assets, tax laws, and more can significantly impact your estate plan’s effectiveness. So, schedule regular estate plan review meetings with your trusted lawyers and attorneys whenever you experience any of the above situations to ensure that your plan will meet your intended goals.