Adults who create an estate plan may be tempted to think that this is a one-time only event. However, it’s important that any estate plan that’s created be reviewed periodically.
Major life changes can slowly make even the best setup ineffective. The best way to combat against having an ineffective estate plan is to review the plan periodically to ensure that it still reflects your intentions.
When Should You Review Your Estate Plan?
One of the primary reasons to review your estate plan is family changes. These can include:
- Marriage
- Divorce
- Remarriage
- Births
- Deaths
You also need to update your estate plan if there are major changes in your assets. This can include buying or selling real estate or starting a business. Going through the estate plan when you have asset changes helps to ensure that everything in your possession is counted for in the plan and that anything that is no longer in your possession was removed from the plan.
It’s also necessary to go over an estate plan even if none of those events occur. Estate planning and tax laws change periodically, which means that you may have to adjust your estate plan to account for those law changes.
What should you consider when you update your estate plan?
Beneficiary designations are one of the commonly overlooked areas of reviewing an estate plan. Some assets, such as life insurance policies, retirement accounts, and bank accounts, may pass to a beneficiary outside of your estate plan. You should take the time to review those designations, as well as the transfer of any property that’s going to occur through your will or trusts.
Creating your estate plan for the first time is a major undertaking. While reviewing and updating it isn’t as intense, it’s still beneficial to work with someone who is familiar with these matters so they can offer guidance throughout the process.
