Updating Your Estate Plan: When and Why It’s Necessary
DK Law Group estate planning: reviewing documents, finances, and strategies to show when and why updating your estate plan is necessary.
Estate planning is an essential way to protect your family and ensure your wishes are followed. But creating a plan isn’t a one-and-done task. Life changes, and your estate plan should change with it. If you don’t update it regularly, your documents might not reflect your current wishes or family situation.
Let’s discuss when and why you should update your estate plan – and how our team can help you every step of the way.
When Should You Update Your Estate Plan?
Certain life events should trigger an estate plan update. Consider reviewing and modifying your plan whenever you experience:
Marriage or Divorce: Tying or untying the knot changes your financial and legal picture. You’ll want to include a new spouse in your will or remove an ex-spouse so they no longer have control over your assets. In especially difficult separations (e.g. a toxic or narcissistic relationship), updating your plan is critical – see our guide on approaching divorce in a toxic environment for tips.
Birth or Adoption of a Child: Welcoming a new child or grandchild means your plan should provide for them. Add them as beneficiaries in your will or trust, and consider naming a guardian for minors.
Significant Financial Changes: Buying a house, starting a business, receiving a large inheritance, or 1031 exchange investments are all big changes. If you’ve acquired new assets or wealth, update your estate plan (and corresponding documents like insurance and titles) to include those.
Death or Changes in Relationships: If someone named in your plan (a beneficiary, executor, trustee, etc.) passes away or if your relationship changes (for example, a falling-out or a new trusted friend), revise your documents. You may need to designate a new executor or update beneficiary designations on accounts.
Moving to a New State: Different states have different laws for estates, probate, and taxes. If you relocate, update your plan to comply with your new state’s laws – failing to do so may complicate the probate process and interfere with your wishes legalzoom.com.
Changes in Law: Keep an eye on federal or state law changes related to estate tax, inheritance, or power of attorney. For instance, estate tax exemption amounts and gifting limits can change, which might necessitate adjustments to your plan. (Tax laws can change frequently; what worked a few years ago may no longer be optimal.)
Why Is Updating Your Plan So Important?
If your estate plan is out-of-date, it might not protect your family the way you intend:
Unintended Beneficiaries: Failing to update after a new child means that child could be left out of your inheritance. Similarly, if you don’t remove an ex-spouse, they might still be legally entitled to control or inherit assets. A simple update ensures the right people inherit from you.
Changing Wishes: Over time, your feelings about who should make decisions or receive assets may shift. Regular updates ensure your estate plan reflects your current wishes – including who you trust as your executor, trustee, or guardian for children.
Avoiding Disputes: An updated plan is less ambiguous. It helps your family avoid confusion, conflict, and even legal battles. For example, clearly updating beneficiary designations on life insurance or retirement accounts will prevent them from accidentally going to someone you no longer intend (remember, those designations usually override what’s written in a will).
Protecting Loved Ones: If you have a family member with special needs or a complex family situation (like a blended family), updating your plan lets you set up trusts or other measures to protect them. (See our post on protecting your loved ones through estate planning and trusts for strategies in challenging family situations.)
How Often Should You Review Your Estate Plan?
Even without major life events, it’s wise to review your estate plan every few years. Many estate attorneys recommend a full review every 3–5 years to ensure everything is up to date merrilledge.com. Regular check-ups will catch any issues early and give you peace of mind that your plan still aligns with your goals.
During a review, be sure to:
Verify Beneficiaries: Double-check who is listed on your bank accounts, 401(k)s, IRAs, and insurance policies. Update these as needed so they match your current intentions.
Assess Executors and Trustees: Ensure the people you appointed are still willing and able to serve. If your chosen executor has aged or your relationship has changed, consider naming a more appropriate person.
Refresh Documents: Confirm that documents like your will, living trust, powers of attorney, and healthcare directives reflect current names, dates, and laws. For example, if a law changed giving your healthcare proxy new authority, you’d want your documents to include that.
If you’re ever unsure about whether an update is needed, our team at DK Law Group can help you review your estate plan and identify any gaps.
Adapting to Tax Law Changes
Tax laws change over time, and those changes can directly affect your estate plan. For example, the federal estate tax exemption amount (the amount you can pass on tax-free) might change in the future, or state estate/inheritance taxes might be introduced or repealed. Staying on top of these updates ensures you’re protecting as much of your wealth as possible:
If the law changes, an old strategy might no longer be the best for minimizing estate taxes. We keep an eye on legislative updates and can adjust your plan (such as setting up trusts or gifting strategies) to save on taxes and preserve more assets for your loved ones.
Likewise, if you’ve moved states, new state tax rules may apply. For instance, some states have inheritance taxes or different probate processes – another reason an updated plan is vital after a relocation.
Conclusion
Life is full of changes, and your estate plan should reflect them. Whether you’ve gone through major life events, gained new assets, or need to account for changing laws, keeping your plan updated is essential for protecting your family and honoring your wishes. Regular reviews (at least every few years) make sure your intentions are clear and your loved ones are provided for as you intended.
How DK Law Group Can Help
At DK Law Group, we specialize in creating estate plans and updating them as your life evolves. Our experienced estate planning attorneys will make the process easy and thorough. We can assist with: adding new beneficiaries, adjusting for tax law changes, revising documents after a divorce or marriage, and more.
Let’s work together to keep your estate plan current and effective. Peace of mind is just a call away. Contact us today at (443) 739-6724 or email diana@dklawmd.com to schedule your estate plan review.
If you found this helpful, consider sharing this post with friends or family who might benefit. Ensuring everyone’s estate plan is up-to-date is a gift of security! 🤝📢