The Importance of Keeping Your Estate Plan Updated
Life revolves around change. Your estate plan is no exception to this mantra. When you originally drafted your full estate plan (if you’ve already done it), you based it off of current law, your current living situation, and financial status. As time passes, your way of life adjusts accordingly. As your life evolves, it’s important to keep your estate plan updated.
Estate plans are incredibly important, and everyone needs an individual plan for his or her estate. It’s a common misconception that estate plans are just for the elderly; it’s smart for anyone over the age of 18 to have one in place just in case of emergency. There’s a good chance you’re many, many years away from actually needing an end-of-life plan, and your life will change many times before you actually need the plan. Despite this, it’s crucial to have an updated estate plan to protect your loved ones financially just in case.
To make sure you’re keeping your estate plan in tip-top shape, you should have experienced legal help on your side. The trusted team of estate planning attorneys at Parks Zeigler is committed to helping you through the complex process of creating, reviewing, and updating your estate plan.
When should you review your estate plan?
In times of crisis, if your estate plan is not up to date, it will not reflect your best interests or your family’s present needs. Your estate plan should not be written and then shoved in a file to collect dust until it’s needed. It’s understandable that most people don’t immediately think of their estate plan when they are dealing with life changes. However, you generally need to update your estate plan anytime you undergo significant changes in your life. This can range from marriage, divorce, children, tax changes, etc.
Because of the importance of estate plans, we recommend you review yours at least every three years; however, it’s beneficial to complete an annual review. It’s only effective if you actually remember to do it—it’s smart to mark specific dates on your calendar to ensure you really follow through with reviewing your plan with an experienced attorney. Many people will do an annual review within the first month of a new year, or when they complete their taxes.
What should you update in your estate plan?
What you update in your estate plan depends on the state of your current plan. If it’s bare-bones and hasn’t been touched in years, you’ll most likely have to adjust most to all of the content. It’s important to sit down with an experienced estate planning attorney to detect any gaps or holes in your documents.
Remember, your estate plan is not just your will; it is a group of documents comprised of :
- Powers of Attorney
- Retirement Plans
- Life Insurance Policies
- Beneficiary Designations
When reviewing your estate plan, all of these items should be updated to reflect your current circumstances.
There are many different life-altering situations that occur that can cause your estate plan to become out of date.
It’s a good idea to add your children to your estate plan; if something happens to you or your spouse, you want to make sure your kids are taken care of. You can also legally put a guardian in place for your child in case of a crisis (if they are under the age of 18). If there are any changes made to your child’s guardian or legal representative, that needs to be adjusted in your estate plan.
Additionally, any stepchildren added to your family through marriage should be added to your estate plan if you want to include them in the distribution of your estate. This also applies if you have remarried and want to include children from both marriages in your estate.
Marriage and Divorce
Any changes to your marital status (divorce, new marriage, death of a spouse) are strong indicators that it’s time to review and update your estate plan. Any change is sure to strongly impact your family dynamic. An adjustment like this needs to be added to your estate plan as soon as possible because either a spouse is being added or removed from your plan. If your estate plan is updated in a timely manner, you can have peace of mind that you and your spouse are financially protected in case of tragedy.
Legally, there is no requirement to make any changes to your estate plan once you tie the knot or go through a divorce; however, it makes things easier over time because your finances will be in line with your wishes. If you fail to update your estate plan after a marriage or a divorce, state law may change your existing estate plan in unexpected ways.
Tax laws are constantly evolving and changing; your estate plan should reflect these changes if they directly impact you and your family. This is especially important if your family moves to a new country or over state lines because your estate plan documents need to be within the regulations of the state or country you currently reside in. It’s crucial to have an estate attorney within close contact so you can adjust your estate plan as soon as tax changes are put into place.
Changes to Beneficiaries
If you are planning on removing or adding new beneficiaries to your estate plan, you and your estate planning attorney will need to review your current estate plan beforehand to ensure you’re not putting your family in a negative financial situation. A common mistake that occurs is planning to split an estate equally between children, but only naming one child to receive the parents’ IRA or by creating a joint checking account with one of your children for convenience; in these situations, the original goal to split the estate evenly will not be met. Situations like these can be avoided with the counsel of a trusted estate planning attorney. To be sure that your financial wishes are met in your end-of-life plan, list your secondary beneficiaries as well as your primary beneficiaries in Trusts, Wills, and Beneficiary Designations. The extra beneficiary provides another means of protection in case a primary beneficiary dies and you can’t update your estate plan in time.
Why is it important to review and update your estate plan?
An estate plan is a plan that you need to maintain over time. Without proper care and maintenance, it will not represent your best interests or financially pan out how you anticipate. An out of date estate plan may negatively impact your family in a time of crisis. You should review and adjust your plan during both positive and negative substantial life changes. A thorough, updated plan created through research and help from an estate planning attorney should give your family peace of mind and protect them financially.
Protect your legacy and the interests of your loved ones by contacting our Virginia Beach & Chesapeake estate planning attorneys today!
Life is constantly changing. Contact the experienced estate planning attorneys at Parks Zeigler to make sure your estate plan is up to date, and your family’s wishes are carried out in case of death.
For a consultation with an experienced Wills, Trusts and Estates lawyer, please contact our office using our toll-free number 888-691-9319, or fill out this short form below to get started.