Your estate plan is a detailed set of directions for the distribution of your assets after your death. As a collection of some of the most important documents to your name, keeping your estate plan up-to-date is essential.
Oftentimes, after individuals create an estate plan, they’ll assume that the documents are good to go for the rest of their lives. But, your wishes for beneficiary designations and asset distribution can evolve over your lifetime. By neglecting to review and revise your estate plan, the documents may not reflect your latest wishes for your estate.
Here, we’ll discuss the importance of reviewing your estate plan, as well as the circumstances in which you should make revisions.
When Should I Review My Estate Plan?
The optimal time to review your estate plan is generally after significant life changes. It’s at these times of fluctuation that you’re most likely to make adjustments to beneficiaries and other information included in the estate plan.
Major life events that can require revisions to your estate plan include:
- Having children
- Moving to another state (tax laws vary from state to state)
- The death of a loved one
- Major purchases, such as a new home
- Creating or buying a business
- Illness or disability
- Changes in investment values
Any significant shift in your financial situation merits a review of your will. A financial change alters the value of your estate, so you should reconsider beneficiaries and the distribution of your assets.
Another rule of thumb to abide by is to review your estate plan every three to five years. Even if no major life events occurred during this period, you may need to make minor updates to the estate plan. Also, simply reviewing the estate plan, even if you don’t need to make changes, is valuable. It gives you a refresher on what’s in your estate plan and provides an opportunity to reflect on your decisions regarding your assets.
Reviewing Important Estate Plan Documents
Your estate plan is made up of several important documents. These documents serve different purposes, and you should review each one for accuracy.
Last Will and Testament
Your last will and testament is one of the most important documents in your estate plan. When you review it, consider the individual that you have named as the executor of your will. Is this still the individual that you would like to handle the distribution of your estate? Are they up to the task? If your designated executor has fallen ill, become injured, or moved far away, you should consider naming a new executor.
A living will is a document and component of an estate plan that details your wishes for end-of-life medical care. It ensures that if you become physically unable to make medical choices at the end of your life, your care will still be carried out in the way that you want.
As you get older, the instructions that you want in your living will may change. So, your living will is a key document to consider when you review your estate plan. Make sure that it clearly details all of the procedures and medications that you want.
For estate plans that include a revocable living trust, it’s crucial to regularly review it and make changes to trustees as needed. You may also want to think about naming a substitute trustee or a successor trustee at some point. Given that your trustees manage and have responsibility for your assets, you should make sure that they’re kept up-to-date.
Power of Attorney
There are multiple types of power of attorney that may be named in an estate plan. The main types are durable, general, limited, springing, and medical. Regardless of the type(s) of power of attorney that are named in your estate plan, reviewing this designation every so often is important. Your power of attorney may have a major life change themselves, so you need to make sure that they’re still up to the job of managing your assets.
Amidst the hustle and bustle of your daily routine, keeping your estate plan up-to-date is unlikely to cross your mind. But, by periodically reviewing your estate plan, you can ensure that when the time has come, your assets are transferred seamlessly to your loved ones.