You spend most of your life building your estate and passing on your legacy to the people who matter the most to you. So naturally, you would want to ensure proper control over your assets even after you pass on and distribute your wealth to the individuals and organizations of your liking. The best and easiest way to accomplish this is through proper estate planning.
Estate planning is an arrangement made by a property owner to prepare and preserve their wealth. One of the many common reasons people make estate plans is to secure their family’s way of life and minimize the tax burden for beneficiaries.
However, estate planning is not something you can set and forget. You should update your estate plan regularly to ensure that your intentions align with its purpose.
Review Timeline: How Often To Update Your Estate Plan
Many people review their estate plan when evaluating their overall finances, often during annual or semi-annual check-ins. Most professionals recommend a thorough review every three to five years. This helps ensure that your documents reflect your family’s current circumstances and goals as well as any relevant changes in tax laws.
You do not need to wait for a milestone birthday or a crisis to contact your estate planning attorney to revisit your plan. Instead, think of it as a routine part of financial housekeeping, just like reviewing insurance coverage or updating retirement accounts.
In addition to scheduled reviews, you should also revisit your estate plan after significant life events. The following sections explain some of the most common triggers for an update.
Marriage and Remarriage
If you recently got married, you must ensure that your new spouse is included in your plan. The same thing is true if you remarry – you can make changes in your estate plan to remove your ex-spouse from your will and trust if this is something you wish to do.
If you’re not legally married and still wish to include your partner in your plan, you can do so. This is essential because your partner may not get anything under the law if you are not legally married, unless it is specifically laid out in your will.
Many property owners name their new spouse or partner as a beneficiary, executor, trustee or financial agent who handles their financial affairs in the event of incapacitation. Making the necessary changes will prevent ambiguity and conflict down the line.
Divorce
You may need an estate plan overhaul following your divorce. Any changes in the family will require you to revisit your will or trust in order to change your beneficiaries. In addition, you would likely want to remove your ex-spouse from your list of inheritors.
Of course, you may keep them in your plan if your split is amicable, but you still need to make small changes on how much of your estate they will receive in the event of your passing.
While this might seem like a lot of work, it’s a necessary process to prevent any potential fights among the family. Thankfully, you can do all these revisions quickly with the help of your estate planning attorney.
New Children in the Family
If you recently welcomed a new baby into your home, you must add them to your estate plan as soon as possible. This ensures all your children are taken care of financially in case something happens to you or your spouse.
The same principle applies if your family grows through adoption. Whether a child is born to your family or adopted, they should be included in your estate plan to help ensure they are financially supported and legally recognized as heirs.
For minor children, it is also important to appoint guardians who can care for them if both parents pass away. Many families choose to establish trusts that provide for children’s needs, such as health care and education, until they reach adulthood. These trusts give parents peace of mind that their children will be cared for responsibly.
The same thing also applies if you remarry and your new spouse has their own children. You can add them to your estate plan if you want to guarantee that your stepchildren are included in the distribution of your assets.
Health Diagnosis
No one wants to think of their demise, which is why updating the estate plan takes a backseat. However, an unfavorable health diagnosis is a severe wake-up call for many, prompting them to get their affairs in order.
If you’ve been recently diagnosed with an illness, you must immediately contact your estate planning law firm to change your will or trust. Updating your plan gives you peace of mind knowing that you have a solid plan and allowing you to focus on your recovery.
Changes in Financial Status
Just like health, a person’s financial status is just as unpredictable, for better or worse. If you experience a significant increase or decrease in business or real estate that you own, you should reevaluate your financial situation and update your estate plan accordingly. Any change in wealth requires you to make changes in its allocation among your beneficiaries.
In addition, a significant increase in your assets means you need to alter your tax plan for an easy wealth transfer after you pass. An estate planning law firm also does tax planning, so mention this to your lawyer so they can set the wheels in motion.
You Have Moved
One of the most common reasons to update an estate plan is moving to a new state. Every state has its own requirements for estate planning. What is valid in one jurisdiction may not be recognized in another. Differences in witness rules or probate procedures can cause unnecessary delays or even render a document unenforceable.
Moving creates practical considerations. If you buy or sell property, your estate plan should reflect the new ownership structure. If your children’s guardians or your chosen executor now live far away, you may want to designate someone local.
Relocation can also change tax implications, particularly if you move between a state that levies estate or inheritance taxes and one that does not. Each of these details is worth reviewing with your estate planning law firm so your plan continues to operate smoothly in your new home state.
New or Updated Legislation
Both state and federal laws influence estate planning. Changes in tax law, property statutes, or probate codes can affect your documents’ validity and effectiveness.
For example, federal estate tax exemptions adjust over time, and Congress periodically updates laws on gifts and generation-skipping transfers. These changes may increase or reduce the amount your heirs ultimately receive. At the state level, revisions to probate or trust codes could alter how executors or trustees are required to act. Because laws change often, it is essential to periodically confirm that your plan complies with current rules.
Note that while South Carolina does not impose a state estate or inheritance tax, federal estate taxes may still apply to larger estates. Families with substantial wealth should be especially mindful of how exemptions and rates change from year to year.
Even if your estate is modest, smaller legislative changes can still impact your estate plan. Checking in with an estate planning attorney helps ensure that your plan remains legally sound and tax-efficient.
Death of a Loved One
The loss of a loved one is difficult enough without the added complication of outdated estate planning documents. If someone you named as a beneficiary, executor, trustee, or guardian has passed away, you should update your plan as soon as possible.
Appointing new individuals helps ensure your wishes are carried out and prevents unnecessary court involvement in filling vacant roles. Even if your chosen agents are still living, it is wise to confirm they remain willing and able to serve in these roles and fulfill their responsibilities.
Estrangement or Reconciliation
Relationships change over time, and your estate plan might need to be updated to reflect those changes. For instance, if you become estranged from a beneficiary, you may no longer wish for them to inherit from you or act on your behalf.
On the other hand, reconciliation with a family member could mean adding them back into your plan. Regularly reviewing who you have appointed as beneficiaries, executors, guardians, or agents helps ensure your documents reflect your current relationships, not circumstances from years past.
Opening or Closing a Business
Business ownership adds another layer of complexity to estate planning. If you open a new business, you need to decide how it will be managed if you pass away or become incapacitated. This may include creating a succession plan and other measures, such as a buy-sell agreement.
Suppose you close or sell a business. In that case, your plan should be updated to remove references to the company and reallocate assets. Otherwise, your documents could contain instructions for property that no longer exists or leave surviving business partners without clear direction.
Changes in Retirement Accounts or Life Insurance
Assets such as retirement savings and insurance benefits often comprise a significant portion of an estate. These typically transfer through beneficiary designations, which override estate planning. That means even if you update your documents, an outdated designation on a retirement account or insurance policy could leave assets going to the wrong person.
Reviewing these designations regularly, especially after significant life events such as marriage or the birth of a child, keeps them aligned with your broader estate plan and prevents conflicts between documents.
Key Documents To Revisit During Update
When you meet with your estate planning attorney to review your estate plan, it helps to have a checklist of the most critical documents. Each serves a unique purpose, and all should be reviewed to help ensure they still reflect your wishes and comply with the law.
- Last Will and Testament: This confirms your heirs, executors, and property distribution.
- Trust Documents: These include revocable living trusts, irrevocable trusts, and special needs trusts that may require adjustments over time.
- Powers of Attorney: Both durable financial and health care POAs should be reviewed to confirm your chosen agents are still appropriate.
- Health Care Directives: Advance directives and living wills should reflect your current wishes for medical treatment and end-of-life care.
- Beneficiary Designations: Life insurance, retirement accounts, and other payable-on-death assets should align with your overall estate plan.
Revisiting these documents helps ensure consistency across your plan and prevents conflicting instructions that could cause confusion for your family later.
Talk to an Estate Planning Attorney at Wiles Law
Make the necessary updates for your estate plan with the help of the attorneys at Wiles Law. We are a full-service estate, tax, and trust planning firm that assists clients in creating wills, trusts and wealth preservation strategies, allowing them to gain control of their property and distribute their assets to whomever they want in the most cost-effective way possible.
We are always willing to accommodate you whenever you need to make revisions to your estate plan. Contact us and let us know how we can help you.