If you have an estate plan in place you are better prepared than over half of all Americans, according to the most recent surveys. For that plan to continue to protect you and your loved ones as intended, however, it needs to be updated from time to time. Knowing how often to review your estate plan, and when a life event should trigger an immediate revision, is the key to a successful estate plan. The staff at Northern California Center for Estate Planning & Elder Law offer some guidelines that should help you to keep your estate plan current and functioning as expected.
Routine Review and Revision
Throughout the course of your lifetime, you should conduct routine reviews of your estate plan and make any revisions necessary at that time. We recommend routine reviews annually. As a service to our trust clients, we offer free reviews every three years.
During a routine review, pay particular attention to common changes that should trigger a revision, including:
- Income – your income will typically increase as you move through your working years. The change in income may cause changes in your estate plan.
- Assets – your asset structure is likely to change as your income and family size increase. The more assets you acquire, the more assets need to be protected in your estate plan. Newly acquired assets should be property coordinated with your trust.
- Beneficiaries – your primary beneficiaries will likely change as you or family members get married and/or have children. Other changes such as divorces, deaths and estrangements may require changes.
- Fiduciaries –you need to review your choice of fiduciaries each time you review your estate plan. You may want to appoint a new spouse to a position or remove someone who is no longer willing or able to serve.
Life Events that Require an Immediate Review
While routine reviews are essential to keeping your plan current and functioning as intended, there are also some life events that may call for a more immediate revision to your estate plan, including:
- Marriage – when you marry, you typically need to change the beneficiary designations on things such as your Will, Trust, retirement plans, and life insurance policies as well as change fiduciary positions within your plan. The marriage of a child is also something that could trigger a review because your son/daughter-in-law could now stand to gain control over the inheritance you plan to leave your child.
- Divorce –do not make the mistake of forgetting to make changes to your estate plan or you could end up with an ex-spouse as the beneficiary of your estate assets.
- Birth and death of beneficiaries or fiduciaries — basically, the death of anyone who is part of your estate plan, as a beneficiary or fiduciary, is cause to review your plan. The birth of a child or grandchild should also be specifically noted in your plan to ensure your beneficiaries are properly identified.
- Youngest child reaches adulthood – once all your children are legal adults, you have the option to gift directly to them instead of counting on a trust.
- Relocation to a new state — because state laws govern many aspects of your estate plan, moving to a new state should call for a consultation with an estate planning attorney in the new state to determine if any changes to your plan are advisable.
- Significant change in assets – minor changes should be accounted for in your plan; however, if you buy or sell a business, or valuable asset, you may need to review your estate plan.
- Retirement – when you retire, a number of important changes will take place, starting with your overall financial picture changing. You may start withdrawing funds from retirement accounts and selling major assets. Those changes warrant a review of your plan. In addition, if you have not yet considered the addition of a Medicaid planning component to your estate plan, now is the time to do so.
Contact Estate Planning Lawyers
Please download our FREE estate planning checklist. If you have additional questions or concerns regarding estate planning, contact the Northern California Center for Estate Planning & Elder Law today by calling (916)-437-3500 or by filling out our online contact form.
- Living Trusts and Incapacity Planning - March 31, 2020
- Estate Planning and Charitable Giving — Key Points - March 29, 2020
- Over-Funding Your Retirement Plan: A Potential Estate Planning Problem - March 27, 2020