Let’s face it, people don’t like to think about their estate plans. Most Americans don’t even have a basic will. Those who have a complete estate plan – will, trust(s), power of attorney and health care directive – can congratulate themselves on being ahead of the general population as they sit back and relax with their alcoholic beverage of choice. The thing they shouldn’t do is put that estate plan away to gather dust until they’re gone, leaving their children to dig it out from under the pile of People magazines and enforce the seriously outdated provisions.
Most people will agree that, in theory, it’s a good idea to update your estate plan every now and again. But how often does it need to be done? It was painful enough the first time!
The question of when to update really depends on what’s happened since the last time you updated. If your kids are still biting your ankles, your spouse is still happy to see you when you come home, and your house is still where it’s supposed to be, you’re probably fine. If your kids left Kansas awhile ago, your then-spouse is now making someone else’s life miserable, or your address has changed, you probably want to make some changes.
Here’s the breakdown of possible reasons you might want to update:
- Changes in tax laws. The laws around the taxation of estates have changed quite a bit in the last decade or so. Many people can get rid of the clunky A/B trusts that used to be the standard for most couples. If you have no idea what I’m talking about, and your trust was created after 2013, be properly grateful. If you have a trust from before 2013, please talk to a lawyer about how you can make your trust – and your life – much simpler.
- Changes in circumstances. As I pointed out above, your life circumstances will change over time. Your kids will get older, move out of the house, and start their own families (preferably in that order). You may move out of your current house, or you may refinance the house you have. You may get married or divorced. All of these should cause you to look at your estate plan and see if changes are needed to reflect your new circumstances.
- Changes in preferences. Perhaps your circumstances are the same, but someone else’s has changed. It may be that your best friend, who was set to inherit a large chunk of money from you, is now a drug addict (I know someone that had this happen to them). You may decide you no longer like a charity you were planning to support, or you don’t think your chosen trustee is the best person for the job anymore. All of these are excellent reasons to update your estate plan.
Those are the most common reasons why people update. But that doesn’t quite answer the question of when to update – or more specifically, how to remember your estate plan after you’ve finished throwing all your ex’s things into the backyard bonfire. It’s rarely the first thing to come to mind in these situations. That’s why I recommend reviewing your estate plan regularly to make sure there aren’t any changes needed. In my perfect world, people would review their plans annually (I always send a reminder to my clients on the anniversary of their trust signing or last update). Since the world does not revolve around my wishes – more’s the pity – I urge people to look at their estate plans at least once every five years. A lot can change in that time, and it’s always a good idea to make sure your plan still reflects your wishes.
If you have any questions, or would like some help reviewing your current trust, you are welcome to email me at email@example.com.