Estate Planning: The Importance of Updating Your Plan Regularly
Estate planning is a crucial part of your financial planning and should not be overlooked. It is the process of arranging for the disposal of your assets after your death. Your estate plan should include a will, a trust, and other legal documents that will outline your wishes around the disposition of your assets.
Many people make the mistake of assuming that once they have created an estate plan, they are done. However, your estate plan should be reviewed and updated regularly to ensure that it continues to reflect your wishes and is in line with any changes in your life circumstances.
Life Events That Should Trigger an Estate Plan Review
There are several life events that should prompt you to revisit your estate plan. These include:
- Marriage or divorce
- The birth or adoption of a child or grandchild
- The death of a beneficiary or executor
- A significant change in your financial situation
- A move to a new state or country
- A change in your health or the health of a loved one
- A change in your goals for your assets
If any of these events occur, it is important to review your estate plan as soon as possible. Failing to do so could result in unintended consequences, such as your assets being distributed in a way that you did not intend, or your estate becoming subject to unnecessary taxes and fees.
The Consequences of Failing to Update Your Estate Plan
If you fail to update your estate plan regularly, there can be serious consequences. For example, if you get divorced and your ex-spouse is still named as a beneficiary in your will or trust, they will still be entitled to their share of your assets, unless you have taken steps to revise your estate plan.
Another common mistake people make is failing to update the beneficiaries on their life insurance policies or retirement accounts. If you have remarried and have not updated these designations, your ex-spouse could still be entitled to the proceeds, even if your estate plan specifies otherwise.
How to Update Your Estate Plan
Updating your estate plan is not a difficult process, but it does require some effort and attention to detail. Here are the steps you should take:
- Review your current estate plan to ensure that it still accurately reflects your wishes.
- Identify any changes in your life circumstances that may require updates to your plan.
- Consult with an estate planning attorney to discuss your options and make any necessary changes to your legal documents.
- Update your beneficiaries on any life insurance policies or retirement accounts, if necessary.
- Make sure your loved ones know where to find your estate planning documents in the event of your death or incapacity.
By taking these steps, you can ensure that your estate plan continues to reflect your wishes and protects your assets for your loved ones.
The Bottom Line
Estate planning is an ongoing process that requires regular review and updates. By failing to update your estate plan, you could be putting your assets and your loved ones at risk. If you have not reviewed your estate plan in some time, now is the time to do so. Consult with an estate planning attorney to ensure that your plan is up to date and reflects your wishes for the disposition of your assets.