Reasons To Update Your Estate Plan

HomeBlogEstate PlanningTop Reasons To Make a Will Update & Check Your Estate Plan

We don’t like to think about what will happen if we get sick or die. It is not a topic we regularly discuss with even those closest to us. We don’t really want to spend time planning for end-of-life events or a future that doesn’t include us. Most of us put off the inevitable realization that we will not be here forever. However, without making a will update and editing other estate documents every 3-5 years, your estate plans may fall apart. Find out how to update your estate planning documents and get started today!

Estate Planning is Necessary, Will Updates Vital

Even in our forties or later, we may only make a half-hearted effort at planning for the future. When we do make plans by writing a will, revising beneficiaries on retirement plans, or seeing an attorney to draw up an estate plan, we feel done. We often tuck the documents away and never think about them again. However, without a will update, estate plans turn into chaos.

It’s easy to think that your kids will sort it all out after you are gone or that the will you scratched out 10 years ago will help everyone know what your desires were. However, passing away without really thinking through what will happen to your assets is a situation that often tears families apart. Estate plans do not change and grow as your life does. You need to review and update them as the inevitable changes happen in your family or with your loved ones. 

Without regular updates, your family could face situations that rip them apart after you pass away. Let’s look at some of the reasons your estate plans could need a once-over with your attorney.

Every 3 Years: Time for a Will Update

Common sense dictates that you should update and/or revise your estate plan every 3-5 years or even as often as quarterly. You may need more or less frequent updates depending on the changes occurring in your life in any given year.

Much can change in a few years. Children come and grow up fast. Marriages may end. Best friends move away. A spouse leaves or becomes terminally ill. Your first grandchild is born. Your ideas about end of life planning change.

As time changes you, you must update your estate plan to reflect those changes. 

Major Life Changes Occur

Definitely review and/or update your entire plan if there are any major changes such as these: 

Illness or disability

You may need to update beneficiaries on retirement accounts. real estate, and any joint accounts, update insurance policies or long term care coverages, change your will, and look at your medical power of attorney designations

Marriage or divorce

If you named your spouse as the agent in your medical power of attorney, you most likely want to change that designation immediately. Not many want an ex-spouse to make any non-designated medical decisions for them. Also, look at property and bank accounts that are owned jointly.

If someone else in your family divorces, also go over everything to make sure your wishes are followed. You wouldn’t want to leave a retirement account to a

New Child or Grandchild 

In this type of situation, you may want to think about establishing a trust or whether you need to change the ages at which a child inherits trust funds. This is true especially if there is a child with special needs who may need long-term help. You may also want to think of paying directly for any educational expenses as this can be done without any gift tax consequences as long as you pay the school directly.

Death of the Named Guardian for Minor Children

You want to keep the guardian designation for your children up to date just in case the unexpected happens in your life and your children need a guardian. If you have not updated this and the person you chose is no longer appropriate as a guardian for your children, your children will have to face the consequences of your lack of planning. 

Caring for an Adult Child or Parent

If you have an adult in your home whom you care for, there may be tax breaks or ways of planning your estate to include them. If it is an older person such as a parent, you may want to discuss what their plans are for their home or retirement accounts if you are their primary caregiver.

Change in Insurance Coverages

You want to make sure that you and your spouse or other dependents have coverage.  If you may need long-term care in the future, work with an attorney to do Medicaid planning to maximize your assets. 

Investment Accounts or Stock Changes

Look at whether the beneficiaries in your accounts are still correct. If you had 2 evenly distributed accounts set to give to two grandchildren, but one increases in value, you’ll need to rethink the situation.

Inheriting a Lump Sum

This can be important if you are trying to spend down to qualify for Medicaid. You will need to check with your attorney to determine whether the consequences of disclaiming the inheritance may be better than if you accept the inheritance.

Changes in Laws and Regulations

You may need to make major changes in investment structuring when tax laws change. Recently, the Roth IRA has changed so that the majority of heirs end up having to receive the entire amount in a 10-year window. This situation may cause you to rethink who inherits your Roth IRAs. There are many similar tax laws that change or could change in the future based on who is in office. 

Death of Executor or Trustee

A trustee is someone who is in charge of handling a trust for you or your heirs. If they are no longer trustworthy or if they become ill, you must change your estate plan or your trust could fall apart. Same with naming an executor in your will. Always name backup executors in your will. If the person named cannot do the job, the court will name a personal representative instead and you will not have a say in who that person is.

Career changes or Starting a Business

With new jobs and businesses come new accounts with new designations. Always remember that any account held jointly with right-of-survivorship goes to the other account holder when you die. Also, be sure to keep your designations for any retirement accounts up to date yearly.

Purchasing a Home or Borrowing Money

Anytime you purchase a home, you are moving money from one account to another. If you have taken money out of a retirement account to pay for your home, you must update your will to reflect the changes. Otherwise, you could leave a non-existent account to an heir.

If you don’t regularly update your plan, emotionally and financially stressful situations can occur in your family. Your loved ones can deal with jealousy or frustrations that someone took all of the good memories by cherry-picking what they wanted first. Grown children may fight over what their parent’s wishes were until there is no love left between the family members. 

You can prevent these issues by staying proactive about keeping your estate plan updated. 

We Can Help

Whether you already have an in-depth estate plan already or you have no plan at all, now is the time to make sure your plans are up to date. With all of the uncertainty in the world today, you don’t want to fly by the seat of your pants when it comes to estate planning. The unexpected could happen to any of us anytime. 

Consulting a knowledgeable and experienced estate planning attorney can help you think through the issues surrounding the changes in life and how to keep your plans up to date. A specialized estate planning attorney understands the latest tax, trust, and retirement account laws, and can help you plan for unexpected illness or long-term care. You can’t predict the future, but you can plan for it.