Updating an estate plan is not usually the first thing on one’s mind when major life events occur. However, if you fail to update your estate plan, over time the plan may not work—for you or your loved ones. Reviewing estate plans at least once every three or four years will help to reach your goals and protect your family, explains the article “Do I Need to Update My Estate Plan?” from Arkansas Business.
Will-Based Planning
Two key documents are used to distribute your assets: your last will and testament and a living trust. As your children and other family members mature, and relationships change, those documents should change as well. Families with minor children use a last will to designate guardians for their children. Mature adults should also utilize the benefits of a last will to indicate who will inherit an IRA, their cherished collections, or sentimental items.
You will want to ensure that the provisions of your Will are still in line with your relationships and wishes. Children or grandchildren may have gotten married or divorced, or someone you care for may have become disabled. By frequently reviewing your Will, and making changes as needed, you can be sure it reflects your last wishes.
Trust-Based Planning
If you have a Revocable Living Trust, you need to review the dispositive provisions and the trust funding. One of the biggest mistakes in estate planning, after failing to have an estate plan, is failing to fund or manage the funds in a trust.
Living Trusts are created to help manage assets during your lifetime, avoid probate, and establish a process for distributing assets in case of disability or death. However, if assets are not re-titled to be owned by the trust, or if the assets don’t have an appropriate beneficiary designation to transfer assets to the trust at the time of your death, they won’t perform as intended. As new assets are purchased, they also need to be incorporated into your estate plan.
Your Agents
Relationships you have with people who have responsibilities for your estate plan may change over time. Your trustee could be battling serious illness, the potential guardian may have gotten divorced, or the Health Care Agent may have moved away. Those important roles need to be updated, including the following:
Trustee—The person or institution administering and managing a revocable trust, when you can no longer do so.
Guardian—The individual who will have legal authority and responsibility to raise your minor child(ren) or the person appointed by a judge to manage the financial or personal affairs of an incapacitated person.
Executor—The person who is in charge of administering and managing your estate after you pass away.
Agent under a Power of Attorney —The person you authorize to make financial or medical decisions on your behalf.
Beneficiary Designations
Another common point of failure for estate plans: neglecting to update beneficiary designations for assets like life insurance, retirement plans and any asset that customarily passes to an heir through a beneficiary designation. Make sure your beneficiary designations are in line with your overall estate plan.
Schedule a Review
A regular review of your estate plan with your estate planning attorney also allows your plan to incorporate changes in tax laws. The last few years have seen many significant changes in tax laws, and more changes are likely in the future. Strategies that may have been extremely effective five or ten years ago are probably outdated and might create costs for your heirs. A review with an experienced estate planning attorney can prevent unnecessary tax liabilities, unexpected inheritances and family feuds. Contact our office to schedule a free consultation today.
Reference: Arkansas Business (Sep. 2021) “Do I Need to Update My Estate Plan?”
