Congratulations! After putting it off for as long as humanly possible, you’ve finally completed and implemented your estate plan. Check that box and cross that off the list! But are you really finished with the planning? The answer must be “no,” or this would be a very short post.
There’s one very important step that remains: a periodic review and update of your estate plan in its entirety.
Yes, that’s right. If your plan was done five years ago or longer, there might be a few changes in your life besides new drapes and a flat screen TV.
Real life changes can happen—like getting married, getting divorced or maybe having a child … or two … or three. It could be that you’ve reconnected with a daughter or son who was once estranged.
These changes can be outside your control—like income tax and estate laws that are amended, repealed or are newly effective. That once perfect estate plan may not be a “10” any more. It has lost some points because it’s out-of-date and—in its current state—has the potential to be inaccurate and cause much grief for your heirs.
Change is constant, and WMUR’s article, “Money Matters: The 'final' estate-planning step,” says that there are some key indicators that show when a review is in order.
It could be a change in:
- Estate valuation: The value of your estate may have changed significantly, like through receiving a sizable inheritance or winning the lottery.
- Economic situation: Your income level has been modified or you’re retiring.
- Employment: If you or your spouse has a job change, it may call for an estate plan modification.
- Family situations: The marital status has changed for your child, grandchild or you. There’s a new baby in the family. Your spouse, child or grandchild has died. You or a family member are now ill or incapacitated. Other individuals like your parents are now dependent on you.
- Businesses: Your closely held business interest may have changed. Maybe you formed, purchased or sold a closely held business, which could mean liquidation or reorganization. Did you execute a buy-sell agreement with your partner, or are there differences in employee benefits, pension plans or deferred compensation plans?
- Major transactions: This includes making substantial gifts and borrowing or lending money—even purchasing, leasing or selling assets or investments.
- You moved: If you moved to another state, it may impact your planning.
- A new vacation home in another state: This could have ramifications.
- Any litigation: Lawsuits can affect your finances.
- Insurance coverage: Changes in your insurance coverage may impact your estate planning needs or may make updates necessary.
- Death of a trustee, executor or a guardian: If one of the individuals you designated dies or changes his or her mind about serving, you must revise your estate plan and replace that person.
Unless you can read tea leaves, you’re not going to know about every event that should prompt you to review and revise your estate plans. Use your common sense and think about what’s going on in your life and in the lives of your family and loved ones. If it’s been four years or more since you reviewed your estate plan with your attorney, now is the time to make that appointment.