When To Update Your Estate Plan

Time to review your Will, Trust and Powers of Attorney?


It's so important to keep your estate plan updated. We hear so often of folks writing their wills and powers of attorney 10 or even 20 years ago… and they don't remember where the originals are, or even the contents of these crucial documents. You should review your plan at least every five years. Here are some additional reasons that you may want to update your plan sooner than the next five years:
Your named executors, beneficiaries, guardians are no longer in your life.  You might have named someone as a beneficiary, executor, guardian, trustee or power of attorney who has passed away, or is no longer in your life (i.e., divorce or separation). If that's the case, you definitely want to update your documents to reflect a new executor or beneficiary.
You have a new family member.  You might want to include a child, grandchild, niece or nephew who has been born after your last will was signed. If you have named individuals specifically and not as a class, you will have to make sure after-born individuals are included.
The law has changed.  You might not know of all the changes in the law, but the law is changing on a regular basis. New cases are decided, new statutes are instituted. Therefore, it is a good idea to have your attorney review your estate plan every few years to make sure the plan complies with the current law.
Substantial increase or decrease in the value of your estate.  There might be federal estate tax or state inheritance tax issues that will depend on the estate value at the date of death. In 2010, there is no federal estate tax, but the estate tax rates are uncertain at this point for 2011. These tax considerations could result in significant cost or savings for your estate. You must be continuously aware of the tax thresholds and the planning needed to protect your assets.
Hitting the jackpot.  If you've acquired a large asset, this might impact your overall estate plan or might necessitate specific mention of the asset in order to allow for the best transfer mechanism. This will only happen if the documents are updated as required.
IRA and 401K Beneficiaries.  You should see an attorney about the best way to designate beneficiaries. You should also have your wills and trusts drafted in a way to allow a trust for minors or for a spouse to be named as beneficiary and still have the retirement "stretched" for income tax purposes
Disabled Beneficiary.  If a beneficiary becomes disabled, you must update your will to insert a Special Needs Trust (SNT). The SNT will allow the assets to be protected for the disabled beneficiary and will prevent them from being disqualified from government benefits.
Spouse has Entered a Nursing Home.  You must update your wills to insure that some portion of your assets are protected from your spouse's nursing home spending if you die before him or her. This is frequently missed and cost the family tens or hundreds of thousands of dollars.