Estate planning is not a one-time task but an ongoing process. As life changes, so too might your estate plan. Here's a guide to ensuring your estate plan remains up-to-date and reflects your current wishes and circumstances.
Assessing Changes in Personal Circumstances
Regularly reviewing your estate plan ensures it aligns with your current situation. Major life events such as marriage, divorce, the birth of a child, or the death of a beneficiary necessitate an update to your plan. additionally if you've experienced significant financial changes—like receiving an inheritance, substantial increases or decreases in the value of your assets, or starting a business—your estate plan should be reviewed and possibly altered to reflect these new circumstances.
Revising Beneficiaries
Beneficiaries on wills, trusts, retirement accounts, and life insurance policies should be reviewed periodically. Ensure that your beneficiaries are current and the allocations are as you wish. If a beneficiary has passed away or your relationship with them has changed, updating your documents to reflect these changes is essential. It's also wise to name contingent beneficiaries if your primary heir cannot inherit.
Understanding Tax Law Changes
Tax laws can significantly impact your estate plan, and they change more frequently than many realize. Stay informed about federal and state tax laws, as changes could affect the value of your estate and the amount your beneficiaries will receive. Consult with an estate planning attorney or a financial advisor to understand how new tax laws might influence your estate planning strategies.
Reviewing Powers of Attorney and Health Care Directives
A durable power of attorney and a health care directive are critical components of any comprehensive estate plan. They outline your wishes for financial and health care decisions if you cannot make them yourself. Please review these documents regularly to ensure they still represent your wishes and that the individuals you've designated are still the best choices for these roles.
Updating Trusts and Wills
Any changes in your intentions for how you would like your assets distributed after your death should be reflected in your will or any trusts you have established. This might include changing bequests, removing or adding heirs, or adjusting provisions for minors. Trusts may also need to be revised if you want to provide for a new charitable cause or if the purpose for which the trust was created no longer exists.
Protecting Digital Assets
In today's digital age, it's crucial to consider your digital assets, such as online accounts and digital files. Ensure your estate plan includes instructions on who should access these digital assets and what should be done with them after your death.
Consulting Professionals
It's advisable to work with professionals when updating your estate plan. An estate planning attorney can help you navigate complex legal matters and ensure your documents sound legal. A financial advisor can provide insight into the financial implications of your estate plan. These professionals can also inform you about any new laws affecting your schedule.
Scheduling Regular Reviews
Set a regular schedule for reviewing your estate plan. Many experts recommend checking your plan every three to five years or after any significant life event. This practice helps you stay on top of any changes, ensures that your project remains effective, and reflects your current desires.
Communicating with Heirs
Clear communication about your estate plan with your heirs can prevent confusion and conflict after your death. While discussing your estate can be a sensitive subject, it's essential for your heirs to understand your intentions and for you to understand their expectations.
Keeping your estate plan updated is vital to securing your legacy and ensuring your wishes are honored. By assessing personal changes, revising beneficiaries, staying informed on tax laws, updating powers of attorney and health care directives, protecting digital assets, consulting with professionals, scheduling regular reviews, and communicating with your heirs, you can maintain an estate plan that effectively reflects your current wishes and circumstances. Frequent updates are the key to peace of mind, knowing that your estate will be handled according to your desires.
