When it comes to estate planning, simply having a will or trust in place isn’t enough; maintaining an up-to-date plan is essential. Life changes and evolves, and so should your estate plan to reflect your current wishes, financial status, and family situation. Below, we’ll explore how frequently you should review your estate plan and the key reasons why this step is so critical.
How Often Should You Review Your Estate Plan?
1. Approximately Every 5 Years
Even if there are no significant life events, reviewing your estate plan every few years is wise. The law changes, and your financial situation may evolve subtly over time, necessitating adjustments to your plan. A periodic review ensures your estate plan remains relevant and aligns with the latest legal guidelines.
2. After Major Life Events:
Certain life events have a significant impact on your estate planning needs, such as:
- Marriage or Divorce
- Birth or Adoption of Children
- Passing of a Loved One or Beneficiary
- Major Career or Financial Changes
- Acquisition of New Assets
Whenever any of these occur, a review of your estate plan is crucial to ensure all necessary updates are incorporated.
3. When Laws or Regulations Change:
Estate laws can vary by state and may change periodically. In recent years, for example, changes to federal estate tax laws have prompted many individuals to adjust their plans. Consulting with an estate planning attorney to discuss legal changes ensures your estate plan remains tax-efficient and legally compliant.
Why It’s Important to Keep Your Estate Plan Updated
1. To Reflect Changes in Family Dynamics
Your relationships and family structure may shift over time. Family changes like marriage, divorce, and the arrival of new family members all warrant a fresh look at your estate plan to ensure your assets are distributed according to your intentions.
2. To Account for Changes in Financial Circumstances
Significant financial changes—such as a new job, sale or purchase of real estate, inheritance, or a sudden windfall—can all impact your estate plan. A more substantial estate may require additional tax planning strategies, or you may wish to distribute new assets to specific beneficiaries.
3. To Maximize Tax Efficiency
An outdated estate plan can expose your assets to unnecessary taxes. Working with a qualified estate planning attorney, you can adapt your plan to new tax laws, ensuring you’re taking advantage of available tax exemptions and minimizing estate tax exposure for your heirs.
4. To Reflect Changes in Personal Wishes
Your wishes regarding asset distribution, healthcare, and end-of-life care may change over time. Regularly reviewing your estate plan allows you to make adjustments that reflect your current values, priorities, and relationships.
5. To Include New Assets and Reassess Existing Beneficiaries
If you’ve acquired new assets, such as a vacation home or investments, or if certain beneficiaries’ situations have changed, it’s essential to address these updates in your estate plan. Doing so ensures your assets are accurately assigned and protected for the future.
In Summary
Reviewing your estate plan regularly—approximate every 5 years, after major life events, or in response to legal changes—ensures it remains current and aligned with your goals. By keeping your plan up-to-date, you’ll protect your loved ones, secure your assets, and rest assured that your wishes will be honored.
Should you find yourself in the position to have your estate plan reviewed, please consider reaching out to us at Forbes Law Firm. Serving Davidson, Cornelius, Mooresville, Huntersville, and the greater Lake Norman and Charlotte areas, we’re here to provide expert guidance and support tailored to your family’s needs.
