Developing a comprehensive estate plan is one of the best things you can do for yourself, your loved ones, and your legacy. However, the development process does not end once you have produced your first draft. Your estate plan should be a living collection of documents that can be adjusted to your changing life circumstances.
That is why reviewing your estate plan after significant life events matters. Below, we discuss what documents you may need to revise as your life changes, then explain common reasons why you need to update your estate plans.
What Does Your Estate Plan Include?
Estate plans involve far more than just a will. They provide a complete guide to how you want your care and assets handled if you are indisposed. To accomplish this, plans typically include documents such as:
- Advanced Medical Directives: Also known as living wills, these documents explain what kind of care you would like to receive (or not receive) should you be incapacitated or unable to make your own medical decisions. They also allow you to name your medical proxy, who will decide your medical care on your behalf.
- Power of Attorney: The person or people you grant power of attorney will have the right to act as your agent if you are incapacitated. They can make decisions about your assets and manage them for you until your circumstances change.
- Trusts: A trust is a legal entity that allows you to pass on assets to your heirs with less risk of tax penalties. The documents for the trust will name the beneficiaries who will benefit from it, the trustees responsible for it, and your instructions for how it is to be managed.
All these documents may need to be revised if your circumstances or relationships change.
Reasons to Revise an Estate Plan
It is considered good practice to perform at least a cursory review of your plan every few years. However, you may need to review and revise it sooner than that if your life changes. If you are not sure whether your plan needs to be adjusted, consider whether any of the following circumstances have occurred since you last wrote or reviewed it:
- New marriage or domestic partnership: If you have entered a new legal relationship with a partner, your plan should be updated to account for their assets and the new dreams you are building together.
- Blended families: Should your new spouse already have children, you have created a blended family. Your estate planning documents can reflect that by protecting your children’s inheritances or recognizing your step-children as additional heirs.
- New children or grandchildren: If you want to grant specific assets to your children and grandchildren, a new birth or adoption means it is time to revise your will.
- Divorce or legal separation: If your marriage or partnership ends, it is critical to update your estate plan to ensure that your ex-spouse is no longer treated like your primary heir if you should pass first.
- Death of a beneficiary: If a beneficiary dies before you, updating your plan ensures that the assets left to them will not be grounds for disputes during probate.
- Disinheriting a beneficiary: If someone changes for the worse after you write your will, you may decide to disinherit them. That requires completely revising your estate planning documents with specific legal guidance.
- Changes to family circumstances: If a family member becomes disabled, gets a better job, gets divorced, or otherwise experiences significant positive or negative life changes, you may want to adjust what you have granted them in your plans.
- Increase in assets: Should you inherit a significant sum or otherwise significantly increase your assets, revising your plan ensures you can do as much good with your increased estate as possible.
- Decrease in assets: If your assets should decrease after a stock market bubble bursts or a medical event drains your savings, you may need to revise your plan to remove references to items, assets, or accounts you no longer own.
- Creation of a business: If you form a new business, it is critical to update your plans to handle the business appropriately after you pass.
- Changes in tax laws: The law is constantly changing. Make sure to revise your estate plans whenever new tax laws and regulations are announced to protect your assets effectively.
Expert Guidance on When to Review Your Will
If any of the circumstances above sound familiar, you may have reasons to revise an estate plan. At The Dayton Law Firm, our goal is to help make people’s lives easier in times of crisis by helping our clients write, review, and administer estate plans effectively. Schedule your consultation to learn more about how we can assist you with reviewing your plans today.