Estate planning commonly involves two critical mistakes. The first is the failure to establish a will, trust, or other essential components of a plan. The second, and equally important, is neglecting to update those documents. Estate plans require periodic reviews and revisions – this is a crucial aspect often overlooked or understated. Staying informed and proactive about these updates is key to ensuring your estate plan remains effective and aligned with your current wishes.
The timing for revising an estate plan varies. If your plan is three or more years old, reviewing it with your estate planner is advisable. Additionally, any changes in tax or other governing laws (such as powers of attorney or advance medical directives) warrant a thorough plan review.
Furthermore, certain life events necessitate a review of your estate plan. Relocating to another state is a significant change, as each state’s laws impact estate planning elements differently. Documents like powers of attorney, advance medical directives, and wills may need updates to align with your new state’s laws.
Acquiring a secondary residence in another state or changing family composition, such as additions or losses, requires adjustments to the estate plan. Changes in personal relationships, divorce, remarriage, or becoming widowed also warrant revisions.
A significant change in the value of your estate, whether an increase or decrease, should prompt a review. Changes in the composition of your estate, such as selling or acquiring substantial assets, also necessitate reassessing your plan.
Outdated beneficiary designations for retirement plans are a common oversight. These designations, not the will or trust, determine who receives assets like IRAs and 401(k)s. It is crucial to regularly review and update these designations, especially if the value of the accounts has substantially increased.
Finally, you should carefully consider the individuals appointed as executors or trustees. These individuals play a pivotal role in implementing your plan, and changes in circumstances or the aging of designated individuals may require a reevaluation of their suitability for the role. Regularly reviewing and updating your estate plan ensures it aligns with your current circumstances and desires.
If any of these situations apply to you, we strongly encourage you to contact us at your earliest convenience. Secure your 15-minute free legacy call here.
