Have you created an estate plan in the past? You should be congratulated, as this is a task that many Americans procrastinate — even putting it off until it's too late. But should you reevaluate your estate plan at various times during your life? Yes. And to help you keep up with that, here are the when, why, and how of updating your estate plan.
When Should You Update?
An estate plan should be reassessed no more than every three to five years. This schedule allows enough time to pass for major elements to be different — such as the value of different assets and your family situation — without overburdening the planner. However, if you undergo a major life change such as divorce or the birth of a child, update your plans at this point too.
Why Should You Update?
An estate plan is not a one-and-done document. It is what is known as a living document because it should be continually edited and updated. While many people may understand the need to change when an heir dies or a child reaches the age of majority, other factors can be less obvious.
For instance, perhaps you created your estate plan when you owned a business stake worth $100,000 and one child wanted to take over the business. So, you buy a $50,000 life insurance policy for them to use to buy out their sibling. However, now that adult child no longer wants to take over the business. Or perhaps the business has grown and it's now worth $200,000. The life insurance will no longer provide enough money. Unless you rebalance the situation, you could leave a mess for your children to sort out after you pass away.
How Should You Update?
So, how should you go about updating your estate plan? Even though changes may seem relatively minor, don't attempt to do this on your own. Changing a valid plan on your own may actually invalidate it if you make errors or omissions. In addition, you should have a professional assess what really needs to be updated in case there are elements that the average person may not realize should be adjusted.
No matter whether a life event has occurred or it's just been a number of years since you reevaluated your plan, begin by going over your plan with an experienced estate planning attorney in your state. They will work with you to identify any potential trouble spots and ensure that not only does your plan still reflect your wishes but that it avoids any unnecessary challenges for your loved ones.
For more information, reach out to an attorney that offers estate planning services.Share