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When Do I Need to Update My Estate Plan?

Have you ever wondered if your estate plan still reflects your current wishes and circumstances? Ensuring your estate plan is up-to-date is crucial to protecting your assets and providing for your loved ones. This blog post will guide you through the key times to review and update your estate plan, ensuring it remains aligned with your goals and needs.

How Often Should I Update My Estate Plan?

Regularly updating your estate plan is essential, especially after major life changes. While there is no one-size-fits-all frequency, here are some general guidelines to consider:

• Every 2 Years: If you're experiencing significant life changes, such as starting a family or nearing retirement, or making many smaller changes to your financial situation, consider updating your plan every two years.
• Every 5 Years: If your personal and financial situation is stable, you might extend updates to every five years.

Working with an estate planning expert can help you establish reasonable intervals for refreshing your plan.

What Life Events Require Estate Plan Updates?

Life is unpredictable, and certain events necessitate a review of your estate plan. Here are some key times to consider updating your plan:

Children

With the birth or adoption of a child or grandchild, it's essential to review your estate plan. As children grow and reach milestones—such as graduating, starting their careers, or getting married—consider how your plan can best serve them. Additionally, decide who will become your child's guardian if something happens to you while they are still minors.

Marriage or Divorce

Marriage or divorce significantly impacts your estate plan. Adding, removing, or adjusting asset allocations based on your current marital status should be done promptly to avoid future complications. This includes updating deeds, changing beneficiaries on investment accounts, and properly accounting for assets.

Death

The death of a beneficiary or a designated guardian necessitates an update to your estate plan. If a beneficiary dies and the will is not updated, their share might be subject to intestacy laws,  which are laws that determine how to distribute a person's assets if they die without a valid will. Consider working with a legal estate expert to incorporate contingency plans into your will.

Health Changes

Experiencing a change in health that could affect your life expectancy or decision-making abilities calls for immediate updates to your estate plan. This can prevent burdens on your executor or heirs. Long-term illnesses may require expert advice on managing medical and long-term care expenses and protecting your assets.

Financial Changes

Changes to your financial situation also warrant updates to your estate plan. These can include:

• An increase or decrease in asset value, like your house
• Receiving an inheritance
• Starting or buying a business
• Changes in income from a promotion, new job, or job loss
• Purchasing or acquiring new property
• Incurring major debts

Tax Law Changes or Moving to a New State

Your estate plan will need adjustments if tax laws change or you move to a new state with different laws. For example, moving to Idaho, which has no estate tax, may render previous tax avoidance strategies unnecessary. If your estate is large enough, you still may have to worry about the federal estate tax.

What Should You Review When Updating Your Estate Plan?

When reviewing your estate plan, whether as part of a regular check-in or due to a significant life change, conduct a thorough examination of your entire estate. This includes:

• Recent financial changes that impact your goals and current plan
• Health or lifestyle changes that impact your goals and current plan
• Beneficiaries named in your will and on your financial accounts
• Your executor or estate administrator to ensure they are still suitable for your plan

Review all key legal documents, including:

• Last Will and Testament
• Living Will
• Power of Attorney
• Life Insurance
• Trust Funds
• Bank, Retirement, and Investment Accounts
• Deeds

Key Terms to Know

• Estate: All the money, property, and other assets that a person owns at the time of their death.
• Executor: The person named in a will who is responsible for ensuring the deceased's wishes are carried out, including distributing assets to beneficiaries.
• Trustee: An individual or organization that is responsible for managing a trust created by a person estate. A Trustee holds or manages and invests assets for the benefit of another.
• Beneficiary: A person or organization designated to receive assets or benefits from a will, trust, insurance policy, or other financial accounts.

A comprehensive estate plan is only as effective as its components. Failing to account for even a single asset or heir can create significant issues, from familial disputes to prolonged probate periods. If there are any questions about your will, your executor may have to rely on intestacy laws, which might not reflect your wishes. Working with a trusted estate planning expert is crucial to navigate this process effectively.

Lean on the Estate Professionals of Idaho Trust

Predicting every life event that could impact your estate plan is impossible. Creating an estate plan is the first step, but good estate planning includes regular updates and reviews after major life events.

At Idaho Trust Bank, we can assist by acting as your executor, trustee, or conservator or providing estate settlement services, relieving the burden on your loved ones when the time comes. However, we recommend consulting with an experienced estate planning attorney to create an estate plan and the necessary legal documents.

To learn more about our estate fiduciary and planning services in Boise and Coeur d'Alene, visit our Estate Settlement Services or Trust and Estate Services pages or contact your local branch today.

Disclaimer: This blog post should not be considered legal advice. Please consult with a qualified estate planning attorney for advice and assistance in creating or updating your estate plan.