It’s important to review and update your estate plan regularly to ensure it accurately reflects your current wishes, financial situation, and family circumstances. Here are some general guidelines on when to review and update your estate plan:
1. Every 3 to 5 Years:
- Regular Review: Even if nothing major has changed, it’s a good practice to review your estate plan every 3 to 5 years. This allows you to account for any gradual changes in your life, such as shifts in your financial situation, changes in tax laws, or personal preferences.
2. After Major Life Events:
- Marriage or Divorce: Update your estate plan when you get married or divorced to ensure your spouse or former spouse is included or excluded according to your wishes.
- Birth or Adoption of a Child: When you have or adopt a child, you’ll want to designate guardians for minor children and consider setting up trusts to manage their inheritance.
- Death of a Beneficiary or Key Person: If a beneficiary, executor, trustee, or guardian named in your plan passes away, you should update your plan to name new individuals in those roles.
- Significant Change in Financial Situation: If you receive an inheritance, sell a business, or experience any other significant change in your wealth, it’s important to update your plan to reflect these changes.
- Move to a Different State or Country: Estate planning laws vary by state and country, so if you move, you should review your plan to ensure it complies with local laws.
- Diagnosis of a Serious Illness: If you or a close family member is diagnosed with a serious illness, consider updating healthcare directives, powers of attorney, and other relevant documents.
- Retirement: As you approach or enter retirement, your financial situation and needs may change, prompting a review of your estate plan.
3. After Changes in Laws:
- Tax Law Changes: Significant changes in federal or state tax laws, including estate, gift, and inheritance taxes, may impact your estate plan. Regular reviews ensure your plan takes advantage of any tax benefits or protections.
- Changes in Estate Planning Laws: Changes in laws related to wills, trusts, powers of attorney, and healthcare directives might necessitate updates to your documents to remain compliant and effective.
4. When Your Personal Circumstances Change:
- Change in Relationships: If your relationships with beneficiaries, executors, or trustees change, or if you no longer trust the people named in your estate plan, it’s time to make updates.
- Change in Wishes or Priorities: If your goals or priorities shift over time, such as deciding to leave a larger inheritance to charity or altering how your assets are distributed among your heirs, you should revise your estate plan accordingly.
5. Technological and Digital Asset Considerations:
- Digital Assets: As your online presence grows, consider updating your estate plan to include instructions for managing digital assets such as social media accounts, online banking, and cryptocurrency.
6. When You Update Your Beneficiary Designations:
- Retirement Accounts and Insurance Policies: If you change the beneficiaries on your retirement accounts, life insurance policies, or other financial accounts, make sure your estate plan reflects these changes to avoid conflicts or unintended outcomes.
7. After Reviewing Your Estate Plan:
- Legal or Financial Professional Review: It’s a good idea to periodically have your estate plan reviewed by an attorney or financial advisor, especially if your circumstances are complex or have changed significantly.
Summary:
Review your estate plan every 3 to 5 years, and update it whenever significant life events, financial changes, or changes in laws occur. Regular updates ensure that your estate plan continues to reflect your current wishes and provides for your loved ones in the way you intend.