After creating an estate plan, many people will let it sit for years without reviewing or revising it. Yet, adopting a hands-off approach to estate planning is risky. While updating your plan for every life change is unnecessary, certain events – and the passing of time – mandate its review. By knowing when and why you need to update it, you can prevent the challenges and confusion that an outdated plan may cause.
Major family changes are crucial to account for in your estate plan. If a significant event affects you or your loved ones, you will want to revise it soon afterward. Doing so will accurately reflect their circumstances – and yours. These updates can also prevent someone who is no longer part of your life, like a former spouse, from receiving your assets.
Some family events that require you to revise your estate plan include:
- The birth of a child or grandchild
- The death of a loved one
- The illness of a loved one
- The marriage, divorce or remarriage of a loved one
- Marriage, divorce or remarriage on your part
Your estate plan must also provide an accurate account of your financial circumstances. They may be stable, though you might have added assets to your estate since creating it. You will want your plan to reflect any circumstantial changes or financial volatility you have experienced, too.
Some financial events that require you to revise your estate plan include:
- The gain or loss of significant assets
- The purchase or sale of significant assets
- The purchase, sale, opening or closure of a business
- A change in state or federal tax codes
- Moving to a state with different tax codes
When no major changes happen in your life, you will still want to update your estate plan once every three to five years. Frequent reviews allow you to make sure your wishes still align with its provisions. These reviews can also help account for any assets or considerations you forgot to include in your plan.
Updating your estate plan may seem like a daunting task. But keeping it fresh can give you peace of mind during your lifetime and your beneficiaries clarity down the road. Consulting an estate planning attorney can help you determine whether your plan needs revisions.