When should a person review their Estate Plan?
An Estate Plan can be as simple as designating an executor (someone to take charge of your matters at death) and, if you have minor children, a designation of an appropriate guardian. Normally an Estate Plan includes at least a will, and probably a durable power of attorney, a living will (or health-care proxy) and perhaps a revocable trust. Here are some guidelines about appropriate times to review your existing Estate Plan.
(1) Change in your material status. Marriage and/or divorce are examples of events that dramatically alter an estate plan. Marriage gives your spouse additional rights to your property, and a final divorce decree causes automatic changes to your will, without your action.
(2) Birth or adoption of children. New children may alter whom you wish to name as their guardian and, without adequate estate planning, can cause property to be divided by law contrary to your intent.
(3) Significant change in your net worth. If your estate planner has not seen an updated list of your assets, your will may not minimize your potential estate tax liability.
(4) Substantial increase in your insurance coverage. An individual (even without other assets) who increases his or her life insurance above $2,000,000 may be creating potential estate taxes that could be avoided.
(5) Death of a spouse. For the same reasons as a deliberate change in marital status.
(6) Death of a beneficiary. If the death of a named beneficiary in your will isn't specifically addressed, your alternate wishes for that beneficiary's share may not be accomplished.
(7) Change in the tax law. Several recent changes have been made in the estate and gift tax provisions, including adjustments to the unified credit and allowance of a deduction for family-owned businesses that requires many technical factors be met before qualification.
(8) Development of special needs of a beneficiary. These needs can include physical or mental impairments that may require trust provisions, or creditor or marital problems of a beneficiary.
(9) You change your mind about a fiduciary. As your children age, a different guardian may become more appropriate. Age, impairment, or geographic distances may affect a trustee's or executor's ability to serve.
(10) Five years pass. As a general rule, if none of the above conditions require an earlier change, look at your Estate Plan at least every five years.