Many people believe that once they have completed an estate plan, they can check this important item off their to-do list for good. However, while strong estate plans are set up to be as flexible as possible, it is worth revisiting your estate plan periodically to ensure it reflects your current wishes and complies with current law.
Specifically, it is critical to review and potentially update your estate plan in each of the following circumstances:
- You move to a new state. Most of the laws that govern wills, trusts, and other estate planning documents are state laws rather than federal laws. Also, different states have different estate tax rates (if any), probate processes, and marital property systems. While an estate plan created in one state is likely to remain valid in a new state, it may not be the most impactful and beneficial plan under the new state’s laws. If you have moved, you may benefit greatly from a new estate plan that takes the specific laws of your new home state into consideration.
- You get married. When you get married, it is often a good idea to update your estate plan so that it includes your new spouse. Generally, the spouse of a deceased person may have a legal right to a portion of a deceased person’s estate whether that spouse is provided for in the deceased person’s will or not. Therefore, it can be beneficial to provide for your spouse intentionally, rather than letting the default laws fill the gap. Furthermore, many married couples can benefit from joint tax planning strategies only available to married couples or may wish to clarify the status of joint and separate property with a document such as a community property agreement.
- You get divorced. Revisiting your estate plan when you get divorced will help you ensure that it reflects your updated wishes in this new phase of your life. Your existing estate plan may contain gifts to your ex-spouse and your ex-spouse’s family members that you may wish to remove. Also, your ex-spouse or former in-laws may be named as your financial or healthcare agents in your power-of-attorney documents. Updating the terms of your will or your power-of attorney-appointments will help ensure that the right people can make decisions for you in the event you are incapacitated, or can receive your assets in the event of your death.
- You have a child. Having a child results in various new estate planning opportunities. For example, you may want to update your will so that it names a guardian for your child in the event that you (and your spouse, if applicable) pass away. Also, it may be beneficial to add language to your will establishing that your child’s inheritance will pass to them in trust instead of passing to them outright. Such trust planning can provide greater protection for funds passing to your child and can help avoid court involvement in transferring your assets if you die before your child turns eighteen.
- One of your children or other beneficiaries gets married or divorced or has a child. When one of your children or other beneficiaries experiences a change in their family circumstances, it is beneficial to ensure that your estate plan accounts for this change. If your beneficiary has gotten married, you will likely want to consider if you want that person’s new spouse to have access to assets you will pass to that person. This is up to you: Some people opt to make assets passing through their estate plan available to their beneficiary’s spouses in addition to their beneficiaries, while others choose to add trust protection to such assets so that they are reserved only for beneficiaries and protected from spouses in the event of a future divorce. If one of your beneficiaries gets divorced, you will likely want to ensure that any references to that beneficiary’s ex-spouse are removed from your estate plan. Finally, if one of your beneficiaries has a child, a variety of new estate planning options become available. It is often highly rewarding to consider how you may want to provide for the future health or education of your beneficiary’s child through trust planning or other strategies.
- Five years have passed since you last reviewed your plan. Even the most well-drafted estate plans are not immune from major changes in the law, which can occur from time to time. If it has been more than five years since you last reviewed your estate plan, it is a good idea to revisit your estate plan to determine whether any updates are needed.
If you would like assistance with reviewing or updating your estate plan, please reach out to Aubin Fefley, Ryan Montgomery, or any estate planning attorney at Montgomery Purdue.