Clients frequently ask me how often they should update their wills and/or trusts. Fortunately, or unfortunately, there is no universal “You need to update after ___ years” rule. Instead, you should review your estate plan periodically (I recommend doing so at least every 5 years) to make sure it is still up to date and still says what you want it to say.
Updates are typically needed not because a certain amount of time has passed, but because circumstances have changed. Here are some of the major changes that cause people to update:
- Changes in tax laws. Tax laws are constantly changing, and it’s a good idea to update your trust periodically to stay in line with the current rules. For example, now that the estate tax threshold is permanently set at $15 million per individual (indexed for inflation), many high earners can simplify their estate plan since they don’t have to worry about estate taxes anymore.
- Changes in personal circumstances. The world is constantly changing, and your life will change with it. Births, deaths, marriages, divorces, and even the purchase of big assets like a house can necessitate an update to your estate plan. You don’t want a situation where a child born after your last update is excluded because they weren’t named (yes, this does sometimes happen; just look at the estates of Heath Ledger or Michael Crichton). And there are plenty of stories out there of ex-spouses inheriting because someone failed to update.
- Changes in preferences. Your life circumstances may not have changed, but your preferences may have. That person who was the perfect trustee 10 years ago may not be such a good choice now. Or you may have left a gift to a close friend with whom you’ve fallen out of touch. These are excellent reasons to make updates.
While there are other reasons to update your estate plan, these are the most common. If one of these situations applies to you, or if it’s been a few years and you just want to check that your estate plan still meets your needs, you are welcome to email me at kaway@kawaylaw.com.
