Updating Your Estate Plan: A Checklist

Why Updating Your Estate Plan Regularly is So Important

Many people breathe a sigh of relief after finalizing their estate plan. It feels good to have your affairs in order! However, creating your initial plan is just the beginning. Life is always changing, and your estate plan needs to keep up.

Regularly reviewing and updating your plan ensures it continues to reflect your current wishes and circumstances. An outdated plan can cause confusion, conflict, and unintended consequences for your loved ones down the road.

Consider this scenario: You created your will 15 years ago when your children were young. Now, they're adults with families of their own. If you haven't updated your will, it may not account for your grandchildren or your children's current needs and situations.

Or perhaps you've acquired new assets, sold property, or experienced changes in your relationships since crafting your original plan. These changes need to be reflected to ensure your assets are distributed according to your current wishes.

Updating your plan gives you peace of mind. You can rest assured that your plan will work the way you intend and provide for your loved ones the way you envision. So while it may feel like a chore, view updating your estate plan as an act of love and care for your family.

Life Events That Should Trigger an Estate Plan Review

While regularly scheduled reviews are wise, certain life events should trigger an immediate estate plan checkup. These events can impact your assets, your beneficiaries, or your own needs and wishes. Here are some key situations that necessitate an estate plan review:

• Marriage, divorce, or remarriage (yours or your beneficiaries')
• Birth or adoption of a child or grandchild
• Death of a spouse or beneficiary
• Significant changes in assets (large acquisitions or sales)
• Moving to a new state
• Changes in tax laws
• Children reaching adulthood
• Changes in your relationship with an executor or trustee
• Launching or closing a business
• Receiving a large inheritance or gift
• Declining health or disability of you, your spouse or a beneficiary

If any of these events occur, don't put off updating your plan. The sooner you make needed changes, the better prepared you'll be. Even if your wishes haven't changed, an update ensures your plan properly reflects your current life situation.

Tip: Set reminders in your calendar to review your estate plan annually, and make updates if any of these triggering events have occurred. Regular, systematic check-ins will help prevent your plan from becoming dangerously outdated.

Key Components of Your Estate Plan to Review

When conducting a review, it's important to look at all components of your estate plan. Here are the key elements to scrutinize:

1. Will: Ensure your will reflects your current wishes for distributing assets and naming guardians for minor children. Check that executors and trustees are still appropriate.

2. Trusts: Review trust terms, beneficiaries and trustees. Ensure trusts are properly funded.

3. Beneficiary designations: Review beneficiaries for life insurance policies, retirement accounts, bank accounts, and any other assets that pass by designation. Update as needed.

4. Powers of attorney: Confirm your choices for financial and healthcare power of attorney. Update if your selections are no longer able or willing to serve.

5. Healthcare directives: Review your living will and other healthcare directives. Ensure they reflect your current wishes and that your appointed agents are still appropriate.

6. Guardian designations: If you have minor children, review your guardian selections to ensure they're still the right choices.

7. Personal property memorandum: If you have one, review and update your personal property memorandum, which specifies how to distribute tangible personal property.

8. Business succession plans: If you own a business, review and update your succession plan and any related documents.

Don't forget to review any new assets acquired since your last estate plan update to ensure they're properly accounted for in your plan. Also consider any digital assets and accounts that may need to be addressed.

How Often Should You Review Your Estate Plan?

Many estate planning experts recommend reviewing your plan annually. You can tie this to another yearly event, like tax preparation or your birthday, to make it a regular habit.

However, an annual review may not be necessary if your life remains fairly stable. In this case, aim to review every 3-5 years at a minimum, or whenever a major life event occurs (see our list of triggering events in the previous section).

The frequency of needed updates will vary over your life. Younger adults may need more frequent updates as they experience more life changes like marriages, new children, and property acquisitions. Older adults with a more settled life situation may not need updates as often.

The key is finding a review cadence that works for you and sticking to it. Put reminders on your calendar so review time doesn't slip by. You can also ask your estate planning attorney to prompt you for a checkup on a regular basis.

When you do conduct a review, scrutinize your plan carefully. Have your wishes or life circumstances changed significantly? Have any new assets or liabilities come into the picture? If so, it's time for an update.

Remember, an outdated estate plan can be almost as problematic as having no plan at all. Protect your legacy and your loved ones by keeping your plan in tip-top shape.

Involving the Right Professionals in Your Estate Plan Updates

While you can (and should) conduct your own regular review of your estate plan, it's wise to involve professionals when making updates. An experienced estate planning attorney can ensure your plan is properly drafted, legally valid, and works the way you intend.

Here are some key times to call in professional help:

1. Significant life changes: If you experience a major life event like a marriage, divorce, birth of a child, or significant change in assets, consult your attorney to ensure needed updates are handled correctly.

2. Moving states: Estate planning laws vary by state. If you move, have your plan reviewed by an attorney in your new state to ensure it's compliant.

3. Tax law changes: If federal or state tax laws change, consult your attorney and tax professional to see if your plan needs adjusting to minimize tax implications.

4. Complexity concerns: If your estate is particularly complex, involving numerous assets, businesses, or special needs situations, work closely with your attorney and other relevant professionals (like CPAs or financial advisors) when making updates.

5. Beneficiary changes: Consult your attorney when making significant beneficiary changes to ensure your plan still works as a cohesive whole.

6. Executor or trustee changes: Work with your attorney to properly document the appointment of new fiduciaries.

Even if you're making what seem like simple changes, a quick professional consult can provide valuable peace of mind. Better safe than sorry when it comes to your estate plan.

Communicating Updates to Your Beneficiaries and Loved Ones

When you update your estate plan, don't neglect to inform your beneficiaries and loved ones. Communicating updates helps manage expectations and can prevent future conflicts or confusion.

You don't necessarily need to share every detail of your plan. But key people to inform include:

• Your spouse or partner
• Your adult children
• Other key beneficiaries
• Your appointed executors, trustees, or agents

Let them know you've updated your plan and share any high-level changes that impact them. For example, let your children know if you've made significant changes to their inheritance or your spouse if you've adjusted any bequests to them.

If you've changed appointments like executor, trustee, or power of attorney, it's critical to inform these people of their new or revised roles. Ensure they're willing to serve and understand their responsibilities.

Consider organizing a family meeting to discuss updates, especially if you're making significant changes. This gives beneficiaries an opportunity to ask questions and understand your wishes. It can go a long way toward preventing misunderstandings later.

Ultimately, aim for a balance of transparency and privacy. Share key information that impacts others, but remember, you don't owe anyone a detailed explanation of your choices. Your beneficiaries should understand that your decisions are yours to make.

The important thing is to keep your loved ones generally informed and prevent unpleasant surprises down the road. Open communication is key to a smooth estate settlement process.

The Risks of Letting Your Estate Plan Become Outdated

It can be easy to let your estate plan sit untouched for years, especially during the busyness of life. But neglecting to regularly update your plan can have serious consequences:

1. Unintended beneficiaries: An outdated plan may leave assets to ex-spouses, deceased individuals, or those you've become estranged from. It may also fail to provide for new children or grandchildren.

2. Inappropriate fiduciaries: If your chosen executor, trustee, or agent is no longer appropriate due to changes in your relationship, their abilities, or their willingness to serve, an outdated plan could leave unsuitable individuals in charge.

3. Unaccounted-for assets: If you've acquired new assets but haven't included them in your plan, they may be distributed in ways you didn't intend. Some assets could even end up going through probate, tying them up and potentially causing conflicts.

4. Conflicts among beneficiaries: An outdated plan that no longer reflects your wishes or family situation is ripe for sparking conflicts among your beneficiaries. This can lead to legal battles and lasting family rifts.

5. Unnecessary taxes or expenses: If tax laws have changed or your assets have grown significantly, an outdated plan may result in your estate paying more taxes than necessary or incurring unnecessary probate expenses.

6. Insufficient protection for minor children: If your children are now adults, your plan may have outdated provisions for their care. Or if you have new minor children not accounted for, they could be left without the protections you'd want in place.

The bottom line? An outdated estate plan can create confusion, conflict, and unintended results during an already difficult time for your loved ones. Regular updates help ensure your final wishes are carried out smoothly and successfully.

Don't let your hard work and thoughtful planning go to waste. Make estate plan updates a regular part of your financial wellness routine.

Documents to Gather Before Reviewing Your Estate Plan

Before diving into an estate plan review, take time to gather relevant paperwork. Having updated information at your fingertips will make the review process smoother and more effective. Here are key documents to round up:

1. Current estate planning documents: This includes your will, trusts, powers of attorney, healthcare directives, and beneficiary designations.

2. Updated financial statements: Gather recent statements for bank accounts, investment accounts, retirement accounts, and any other financial assets.

3. Life insurance policies: Have your current life insurance policy documents handy.

4. Real estate deeds: Gather deeds for any real property you own.

5. Business documents: If you own a business, have relevant documents like buy-sell agreements, partnership agreements, and succession plans available.

6. Loan documents: Gather paperwork for outstanding mortgages, lines of credit, and other debts.

7. Tax returns: Have your most recent tax returns on hand.

8. Family information: Make a list of current family members and any pertinent information like births, deaths, marriages, or divorces that have occurred since your last plan update.

9. Digital asset inventory: List your significant digital assets and accounts, along with access information.

Having these documents assembled will give you (and your professionals) a clear, current picture of your assets, liabilities, and family situation. You'll be able to see what's changed and make informed choices about any needed updates.

Tip: Keep your estate plan and supporting documents in a secure location, like a fireproof safe or safety deposit box. Let your executor or a trusted loved one know where to find these documents if needed.

Wrapping Up: Your Estate Plan Update Checklist

We've covered a lot of ground in this guide to updating your estate plan. Here's a handy checklist to sum it all up:

1. Review your plan annually, every 3-5 years at a minimum, or after major life events.
2. Examine all key components:
   • Will
   • Trusts
   • Beneficiary designations
   • Powers of attorney
   • Healthcare directives
   • Guardian designations
   • Personal property memorandum
   • Business succession plans
3. Involve professionals for significant changes, complex situations, or legal compliance.
4. Communicate key updates to your spouse, adult children, beneficiaries, and fiduciaries.
5. Gather relevant documents before your review:
   • Current estate plan
   • Financial statements
   • Insurance policies
   • Real estate deeds
   • Business documents
   • Loan documents
   • Tax returns
   • Family information
   • Digital asset inventory
6. Securely store your updated plan and supporting documents. Let key individuals know how to access them if needed.

Remember, your estate plan is a powerful tool for protecting your loved ones and leaving a lasting legacy. But it's only effective if it's up-to-date.

By faithfully reviewing and revising your plan, you can rest assured that your final wishes will be carried out and your loved ones will be well cared for. Consider it a gift of love, clarity, and peace of mind for those you cherish most.