Taking the time to create a comprehensive estate plan is commendable. Considering your final wishes, advanced directives, distribution of your assets and naming a power of attorney takes a good deal of planning.
However, a common mistake many people make is putting their estate plan somewhere safe and never updating it. After all, life is constantly changing, and our estate plan should do the same.
Significant life changes
An estate plan is a living document that should evolve with you. Some key life events that will require you to update your plan include:
Marriage: You may want to add your spouse as a beneficiary or update any powers of attorney (POA). It’s also an opportunity to consider joint ownership of assets and designate your spouse as your estate’s executor.
Divorce: Conversely, divorce is another critical time to reassess your estate plan. You’ll likely need to remove your former spouse as a beneficiary, power of attorney, and executor to protect your assets.
The birth or adoption of a child: The addition of a family member is an exciting time. You will want to designate a guardian and establish trusts for your child’s future in your estate plan.
Death of beneficiary, executor or POA: The death of a key person in your estate plan will require you to update it.
Significant change in finances: Whether you’ve received a substantial inheritance, experienced a windfall or bought or sold property or a business, any significant change in your financial status calls for a review of your estate plan.
Retirement: As you transition into retirement, your goals and financial situation may shift. It’s a good time to reassess your estate goals and ensure your plan aligns with your new lifestyle.
In addition to life changes, external factors can also impact your estate plan, such as changes in tax laws. You may need to make adjustments to optimize your estate’s tax efficiency.
Keeping your estate plan current is crucial to accurately reflect your wishes and circumstances. Working with someone who can help you make informed decisions and maintain a plan that evolves with you can provide peace of mind for you and your loved ones.
