TOP REASONS TO UPDATE YOUR ESTATE PLAN
Having an estate plan in place is an important task in virtually anyone’s life. However, once an estate plan is created, it should not simply be placed in a drawer and forgotten about. Rather, estate plans should be reviewed from time to time by an estate planning attorney. This is because the need for occasional revisions is not an uncommon situation. As a general rule, if the estate plan is five or more years old, it is time to review it and make sure it is still appropriate. Below are some examples of when it is time to have the plan re-evaluated:
EXECUTORS AND TRUSTEES
Trustees and executors are individuals who implement an estate plan and in some cases, they are also the people who determine whether or not it is an effective plan. Many individuals do not give the appropriate amount of consideration to these appointments. However, even if the people were selected with great care, a change in circumstances may make it necessary to reconsider whether or not they are still the most appropriate people for the job. After several years have past, another person may be a better choice: someone may no longer be able to perform the duties, or an appointed person may have even passed away.
If a person has moved to another state, it is important for him or her to understand that estate planning laws are not national, but vary from one state to the next. Therefore, there may be a variance of laws concerning living wills, advance medical directives, powers of attorney, and similar issues. Anyone who has moved should make sure these documents are updated in accordance with the laws of the new state or parts of the plan may become null and void.
OUTDATED RETIREMENT PLANS
Retirement plans can sometimes become outdated, but this occurrence is commonly overlooked by many individuals. Updating beneficiary designations of 401(k)s, IRAs, and other retirement plans is essential. The beneficiary of such accounts is the person on file with the estate plan, not necessarily the will or trust. This is why this issue often falls through the cracks, as such forms are often unreviewed for a decade or more.
A CHANGE IN LIABILITIES OR ASSETS
If assets or liabilities changed significantly in the value of a person’s estate since the original plan was created, it should be reviewed. This is true regardless of whether the estate’s value has decreased or increased. The owner of the plan must decide if the original way the property was divided is still desirable in light of the change in circumstances. Ultimately, all changes call for reassessment of the plan.
ADDITIONS TO THE FAMILY
Documents may also need to be revised by estate planning attorneys if there are new additions to the family. For example, a person may wish to place a new grandchild in his or her will or the person may have been divorced and want to remove a former spouse from claiming an inheritance. Revised documents must be created to reflect these new preferences or the old ones will remain in place. Beneficiary designations also dictate who receives certain assets, financial accounts, life insurance or annuities. All forms should be reviewed by an estate planning attorney and amended, if necessary.
If you have questions about updating your estate plan, contact our estate planning attorneys in Orange County or Corona today!