Estate planning documents are prepared based on a snapshot of your life at the time you prepare them. The documents accomplished your goals and objectives then. But, life changes. While your estate plan may have achieved your objectives then, your goals now may be different. So, the documents you have may not accomplish your goals at this point in your life.
Time brings changes in tax, property, probate, or other laws which could impact your estate plan. In 2000, for example, the estate tax exemption was $675,000 per person. A substantial estate would have pushed an individual estate over the estate tax threshold. Many estate plans at the time included provisions to deal with and minimize estate tax liability.
Tax laws have changed significantly. Today, very few estates are subject to estate taxes. If you have a plan to minimize estate tax liability, you should reevaluate whether that type of planning is still advantageous for your family.
You may also have changes with your family or finances that could impact your estate plan or require modifications. For example, I'm currently working with a family who created a simple plan with another attorney several decades ago when they were first married. After starting a family, they updated their plan to provide for their children while they were minors. The couple has recently retired, so we are now revising their plan to accommodate their retirement, provide for their adult children and their minor grandchildren. Their estate plan needs updating and changing to grow with their family and adjust to new goals and objectives.
While there are no hard and fast rules about how frequently you should update your estate plan, I believe the following life changes may trigger a need to do so:
- A change in your marital status
- An addition to your family, by birth, adoption, or marriage
- A substantial change in the value of your assets or in your plan for how to use them
- A move to another state
- Upcoming retirement
- Changes in tax laws
- The simple passage of time
If it has been more than three years since you had your estate plan documents prepared, it's time to pull them out, dust them off, and read through them to ensure they are still accomplishing your estate planning goals. And, while you're at it, check your beneficiary designations to make sure that they work with your overall estate plan.
Your estate plan is something that should change as your life changes. Otherwise, all you have is a set of outdated documents that don't accomplish your goals or protect the people in your life that matter most.
Resources for More Information
I have written two books you may find helpful in preparing your estate plan. You can download them here. Or, if you want physical copies of the books, call me at (254) 233-7300, and my staff will get copies to you in the mail.
You can also register for my Estate Planning webinar here. I promise you I'll give you answers you won't find on Legal Zoom or Rocket Lawyer.