The Importance of Updating Your Estate Plan: Avoiding Pitfalls and Ensuring Effectiveness
You likely already understand the importance of creating an estate plan. Having a will, trust, power of attorney, and advanced health directives provides peace of mind to you and your family that your affairs will be managed in the event of death or incapacitation.
For many of us, making an estate plan allows us to check one item off our never-ending to-do list. However, keeping it updated is just as important. After all, life changes, and so should your estate plan.
Life Events That Affect Your Estate Plan
Throughout your life, you will experience significant events. You may experience all of them or just some, but these are the ones that will require you to review and update your estate plan.
Marriage
Getting married changes your legal and financial status. You may want to update your estate plan to include your spouse in your will, designate them as a beneficiary, grant them power of attorney, or name them as your healthcare proxy.
Divorce
Just as getting married affects your estate plan, so does getting divorced. You’ll likely want to remove your ex-spouse from your will, trusts, power of attorney designations, and any beneficiary designations on life insurance policies or retirement accounts.
Birth or Adoption of a Child
The arrival of a new family member is a cause for celebration and an important time to update your estate plan. You may want to name a guardian for your minor children in the event of an untimely death, set up trusts for their future, and ensure they are included in your will and added as beneficiaries to life insurance policies and investment accounts.
Change in Financial Status
A significant increase or decrease in your wealth should prompt a review of your estate plan. If you received an inheritance, consider how these assets will be distributed. Starting a successful business will also require you to consider what will happen to the company if you die or become incapacitated and to name a successor. Conversely, if you’ve experienced a financial loss, you may need to adjust how you allocate your remaining assets.
Retirement
Retirement is another life change that often requires adjustments to your estate plan. You may need to make revisions to reflect changes in income, plan for potential long-term care needs, and other retirement-related factors.
External Circumstances That May Require You to Update Your Estate Plan
Even if you have never experienced any of the life events listed above, other circumstances will necessitate reviewing and updating your estate plan.
Death of a Beneficiary or Executor
If a person named in your estate plan passes away, you should update your estate plan. This could be a beneficiary set to inherit from you or an executor, trustee, power of attorney, or healthcare proxy tasked with managing your estate and affairs.
Changes in Tax Laws
Tax laws change regularly, and these changes can significantly impact your estate plan. It’s crucial to review your estate plan to ensure it complies with updated regulations and that there are minimal taxes on your estate.
LPEP Law Can Assist You With Creating and Updating Your Estate Plan
Whether you need assistance creating an estate plan or updating your current one, our attorneys at Lonich Patton Ehrlich Policastri can help. We have extensive experience in estate planning and can work with you to ensure your estate plan covers all of life’s contingencies and reflects your wishes. Our lawyers can guide you on how to structure your plan to minimize taxes and provide your loved ones with peace of mind and financial security.
Contact us for a free consultation by calling 408-553-0801.
Disclaimer: This article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.