One of the most common mistakes in estate planning is thinking of the estate plan as being completed and never needing to review your estate plan again after the documents are signed. That is similar to taking your car in for an oil change and then simply never returning for another oil change. The years go by, your life changes and you need an estate plan review.
The question posed by the New Hampshire Union Leader in the article “It’s important to periodically review your estate plan” is not if you need to have your estate plan reviewed, but when.
Most people get their original wills and other documents from their estate planning attorney, put them into their safe deposit box or a fire-safe file drawer and forget about them. There are no laws governing when these documents should be reviewed, so whether or when to review the estate plan is completely up to the individual. That often leads to unintended consequences that can cause the wrong person to inherit assets, fracture the family, and leave heirs with a large tax liability.
A better idea: review your estate plan on a regular basis. For some people with complicated lives and assets, that means once a year. For others, every four or five years works just fine. Some reviews are triggered by major life events, including:
- Marriage or divorce
- Large changes in the size of the estate
- A significant increase in debt
- The death of an executor, guardian or trustee
- Birth or adoption of children or grandchildren
- Change in career, good or bad
- Health crisis
- Changes in tax laws
- Changes in relationships to beneficiaries and heirs
- Moving to another state or purchasing property in another state
- Receiving a sizable inheritance
What should you be thinking about, as you review your estate plan? Here are some suggestions:
Have there been any changes to your relationships with family members?
Are any family members facing challenges or does anyone have special needs?
Are there children from a previous marriage and what do their lives look like?
Are the people you named for various roles—power of attorney, executor, guardian and trustees—still the people you want making decisions and acting on your behalf?
Does your estate plan include a durable power of attorney for healthcare, a valid living will, or if you want this, a DNR (Do Not Resuscitate) order?
Do you know who your beneficiary designations are for your accounts and are your beneficiary designations still correct? (Your beneficiaries will receive assets outside of the will and nothing you put in the will can change the distribution of those assets.)
Have you aligned your assets with your estate plan? Do certain accounts pass directly to a spouse or an heir? Have you funded any trusts?
Finally, have changes in the tax laws changed your estate plan? Your estate planning attorney should look at your state, as well as federal tax liability.
Just as you can’t plant a garden once and expect it to grow and bloom forever, you need to review your estate plan so it can protect your interests as your life and your family’s life changes over time.
Reference: New Hampshire Union Leader (Jan. 12, 2019) “It’s important to periodically review your estate plan”