You May Need to Update Your Estate Plan

One of the top estate planning mistakes you can make is failing to update your estate plan. Not making the proper updates can wreak havoc on the best thought out plans. In this article, we will go over six reasons you would need to update your estate plan.

You May Need to Update Your Estate Plan

1. Changes in Legislature

A change in legislature, whether it is for taxes or estate planning, is the number one reason to update your estate plan documents. Failing to do so could leave you with obsolete documents. This could cost your heirs a lot of money in taxes or attorney fees to sort it out. Whenever you hear of any law changes, be sure to contact your estate planned to be sure that your documents are up to date.

2. Relocate to Another State

Estate planning laws are state specific. If you relocate to another state, the change in laws may leave large holes in your estate plan. Even a small difference, like the number of witness signatures required on a will, can cause a lot of trouble. For example, the State of Arizona requires two witnesses for a will to be considered valid and to go through the informal probate process. If your will only has one witness, or is only notarized, your beneficiaries will have to go through the more lengthy, complicated, and expensive formal probate process. Additionally, such forms as powers of attorney, advanced medical directives, and living will are state specific. Meaning they may not be accepted as valid in your new state of residence.

3. Family Changes

Any type of family change, such as birth, death, or marriage, warrants an estate plan update. You want to make sure any children or grandchildren are provided for and that any divorced family members are properly addressed. It is also important to remove any deceased beneficiaries as failing to do so can cause complications.

You may also want to make changes to address a beneficiary who has developed irresponsible behaviors. This may mean disinheriting them or setting up special distributions to prevent them from squandering their inheritance.

4. Substantial Financial Changes

Any substantial financial changes, whether it is an increase or decrease in assets, are another reason to update your estate plan.  This is the case because such changes will most likely affect how you want your property to be divided. If you no longer have an asset you were specifically gifting to a beneficiary or beneficiaries, you may want to reallocate assets to them from another source.

5. Outdated Beneficiary Designations

Often forgotten about, but still an integral part of your estate plan are beneficiary designations. These are on any qualified retirement plan, such as an IRA and 401k. They are also on annuities and life insurance policies. All these assets are distributed according to their beneficiary designation forms, not the instructions in your trust or will. So, having these up to date is very important to avoid issues later on.

6. Personal Representative/Trustee Appointment

It is important to review your personal representative/trustee appointments to make sure they are still appropriate. If you find that a trustee is unwilling or incapable of performing their duties it is important that you quickly update your documents to name a replacement. Or if you feel that your changing circumstances have made your estate too complicated for them to handle, you will want to update your appointments. Other reasons you may want to change your personal representative/trustee could include that they have passed away, moved away, or have become too aged. This personal will oversee your entire estate, so your choice is important.

How to Update Your Estate Plan

If you have determined that you need to update your estate plan, make an appointment with your estate planner. They can help you to legally update your documents. Do not just cross off or add notes to your current document. The sooner you make the necessary updates to your estate plan, the better. Delaying changes could be costly to your beneficiaries.

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