Why Estate Planning Attorneys Recommend Reviewing Your Plan Every Few Years

Your estate plan should reflect your current situation and goals pertaining to finances, assets, family, and philanthropy. Because circumstances can change after creation of the initial plan, your finances or wishes may change as well.

Estate planning attorneys recommend reviewing your plan every few years so that you can make updates as necessary. Even if you have not undergone any significant changes in your life, it is generally recommended to review your plan every three to five years to make sure that you are satisfied with how everything is arranged.

Career Changes

Whether you start a new job, land a promotion, or lose a job, career changes should prompt a review of your estate plan. 

Getting a new job or a promotion can result in an increased salary, additional bonuses, and/or stock options, which will directly impact your assets and tax obligations. It is recommended to review your estate plan if you get a new job, regardless of whether or not your income changes, since it may trigger changes to your retirement plan or life insurance policies. 

In the case of job loss, reviewing your estate plan is vital because your reduced income may have implications for estate taxes or life insurance. This is an opportunity to make changes to your plan so that it is in line with your current finances. 

A review is also recommended following retirement, which is a big milestone that can signal a shift in financial income, tax obligations, and priorities. For instance, many individuals place a greater emphasis on healthcare, philanthropy, and legacy planning once they leave employment. 

Finances/Assets

Financial realities can change for a wide range of reasons- some of which are anticipated and others that are unexpected. It is possible that an individual will experience significant financial loss or significant financial gain throughout the course of their life.

Some examples of this include:

  • Career changes 

  • Inheritance

  • Economic/natural disasters

  • Buying/selling a property/business

Notable changes to your financial situation should prompt a review of your estate plan due to the potential impact those changes can have. For instance, gaining a significant increase in assets may prompt a change of estate planning strategy to make the most out of the newly gained wealth. In the case of experiencing significant asset loss, the estate plan may need to be revised to ensure that gift/trust inclusions still make sense.

Even minor changes to your financial situation should prompt a review of your estate plan if they impact your tax situation or assets. Ultimately, your plan should reflect your current financial reality.

Familial Matters

A change in familial circumstances can have a significant impact on your estate plan. In some cases, an action such as marriage or divorce can have legal ramifications that override the content of your estate plan. 

Given the complications that can arise from marriage, divorce, or remarriage, it is recommended to speak to an estate planning attorney to ensure that there are no misunderstandings and that the plan reflects your wishes. This is especially important in the case of remarriage following divorce. Ex-spouses could remain on retirement accounts, wills, and life insurance policies unless the plan is updated. 

Additionally, since most states automatically give spouses the right to some assets, it is important to check that your wishes are reflected in your estate plan. This is especially crucial if you have children from previous marriages, who may be disinherited following marriage if the plan hasn’t been updated. The birth or adoption of a child (or grandchild) should also prompt a review. 

Estate and Tax Laws

Estate and tax laws can vary by state. If you are planning on moving, it is important to work with an expert who can help ensure that your plan is fully compliant with local state laws. There can also be tax implications, as laws regarding inheritance, property, and estate taxes change depending on the state. In some instances, a previously valid estate plan document can become invalid/ineffective once you move to a new state.

Even if the document remains valid, it is still recommended to consult with a local estate planning attorney. Their local expertise can help develop a strategy that optimizes the laws and taxation obligations of the state.

Changes in Goals

Goals can change over time. You may find that you wish to engage in different types of philanthropic endeavours over time as you discover new passions and causes that are important to you. You may decide that you want to switch causes, support new causes, or increase your contribution to current causes.

You might change your mind on how you would like to divide up your assets, especially in cases where new members join your family, such as the addition of a child or grandchild. Speaking to an estate planning attorney can help you update your plan so that you can support the people and causes that mean the most to you. 

MKP Law Estate Planning Attorneys

At MKP Law, our expert team of estate planning attorneys is available to offer any support you may require when creating or updating your estate plan. With more than 45 years of experience, our team is on hand to deliver the expert guidance you need to have full confidence that your estate plan is up to date and in line with your wishes. For more information on how our experts can help you with estate planning, contact us today.