Estate planning offers a chance to take account of current circumstances and plan for future conditions. But as things change over time, it can be appropriate to review those plans and implement any necessary changes. These seven events suggest it is time for a review.
1. Marriage
Marriage creates a new connection between the spouses, and by extension, their families. The new couple may not have had a chance to discuss and plan for the long-term financial future, or to plan for contingencies. Also, many couples choose to act as the first agent to each other for purposes of financial or healthcare issues. The best way to avoid potential problems with doing so is to have proper appointments in place.
2. Kids
Estate plans should be reviewed upon the birth or adoption of children, so that proper plans can be put into place to ensure that the children will be cared for in the event of an emergency. Also, estate plans can create structures to ensure that assets passed to children will be preserved, used or distributed in a responsible way.
3. Death or Divorce
A divorce usually triggers the need for planning, to ensure that new agents and beneficiaries are named to replace the former spouse and his or her family members. It should not be presumed that a dissolution of marriage will take care of this automatically. Similarly, a death of a beneficiary or an agent necessitates a consideration of who should take the place of the decedent.
4. New or changing assets
Acquiring or exchanging assets can trigger a need to update an estate plan. At a minimum, specific provisions relating to any prior assets may not apply, and one may not want them to follow any catch-all provisions. Examples of this can include buying or selling real estate, a business, stock, or collectibles – or can come from receiving an inheritance, bonus, or other inflow of money.
5. Moving
Moving can be an important reason to revisit plans, particularly when the move is a significant distance. Not only does it imply potentially significant changes in assets, but a move also can necessitate the appointment of new agents who are located near to the principal. Also, if crossing state lines, it is possible that different requirements will apply, and that documents executed previously may not be effective.
6. New job
Changing jobs is an important trigger because of the potential for a change in benefits. For example, a prior job may have included insurance, retirement savings, or other perks. It is important to address changes to beneficiaries and coverages, and ensure that any deficiencies are addressed.
7. Changes with agents, guardians and fiduciaries
People change over time. For some, this means developing a closer bond. Others can move away, become less able to serve, or less close than they once were. If someone appointed previously is now unable to be effective as an agent, a guardian, an executor or a trustee, then someone new should be appointed.
Each of these situations can trigger a need to review an estate plan immediately, but sometimes smaller changes can build up over time. Therefore, it is a good idea to review the plan every so often to make sure it is still optimal.