If you actually have a comprehensive estate plan in place you are to be commended, given the fact that over half of all Americans do not despite knowing the importance of an estate plan. Now that your estate plan is in place you can sit back and not worry about estate planning issues anymore right? Wrong! Creating your estate plan is certainly the first, and most important step when it comes to protecting you, your assets, and your loved ones; however, failing to take the time to review and revise that plan as necessary is sometimes an even bigger error than not creating an estate plan in the first place. With that in mind, when should you review your estate plan?
The Danger in Failing to Review and Revise
Your estate plan will likely be the most important set of legal documents you create and execute over the course of your lifetime. The reason for this is that your estate plan, if drafted properly, should provide for the protection and growth of your estate assets, ensure that you are protected in the event of your incapacity and that your wishes will be honored at the end of your life, and make sure that your estate assets are used to provide for your loved ones after you are gone. When you stop and think about it, those are some very lofty goals! The facts and circumstances that existed when you created your estate plan, however,will not remain constant. Life marches on and things change. Sometimes those changes are unimportant, yet other times they are monumental. A monumental life change may have a direct impact on your estate plan and failing to revise your plan accordingly could have disastrous results. For example, imagine that you created a trust to hold some valuable assets and named yourself as the Trustee and your spouse as the successor Trustee. Now imagine that you suffer a period of incapacity as a result of a horrible car accident. The successor Trustee will automatically take over control of the trust. The problem is…you and your spouse got divorced two years ago, and it wasn’t a pleasant divorce. Your ex-spouse now has legal control over all the trust assets because you forgot to review your estate plan.
You should plan to review and update your estate plan as a matter of course throughout your life even if nothing prompts the review. While there is no universally accepted interval, think in terms of every three to five years during your working years and every five to eight as you move into your retirement years.
Life Events that Should Prompt a Review
Certain life events call for an immediate review of your estate plan, including:
- Divorce and Marriage — your own marriage or divorce should call for an immediate revision of your plan; however, sometimes the marriage or divorce of a beneficiary can also warrant a review and revision of your estate plan.
- Birth and Death — your estate plan should already account for future born beneficiaries, though it is best to include them by name when they arrive. The death of a beneficiary may also prompt a review of your plan. One thing people often miss is the need to revise their plan upon the death of an Executor, Trustee, or Guardian as well.
- Move Out of State — because state law governs much of your estate plan, if you move to a new state you should have an estate planning attorney in that state review your existing plan.
- Significant Change in Assets — small fluctuations should be covered in your existing plan; however, if your estate value increases or decreases by 20 percent or more, and/or if you purchase/sell an important asset (a business) you need to review your plan.
- Change in the Law — if, for example, the laws relating to the federal gift and estate tax exemptions were to change you would need to review your plan to see if any corresponding changes need to be made.
For more information, please join us for one of our upcoming free seminars. If you have any additional questions or concerns regarding your Last Will and Testament, or you wish to get started on yours, please contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.