If you’re one of the too-few Americans who has already met with a financial advisor and created a detailed estate plan, you’re already ahead of the curve. But have you considered the fact that your estate plan may need to be revisited in the near future?
“Far too many people create their estate plans early—which is great—but then forget about them and let them become increasingly outdated as the years go by. This is a huge mistake,” says Samuel Rad of Affluencer Financial.
Estate planning documents, including wills, trusts, powers of attorney and other important aspects of your financial future should be revisited regularly to ensure that the future you have on paper is aligned with your life as it stands today.
Here are some of the major reasons you should revisit your estate plan and make changes as necessary.
New spouse or divorce: If you get married or divorced, you’ll want to ensure that your estate planning documents account for your spouse or remove your ex from them.
New children or grandchildren: When there are additions to the family, it’s a good idea to revise your will and trusts to ensure every child and grandchild is given their share.
Death in the family: If the deceased was listed as a beneficiary or power of attorney on your estate plan, they will no longer be able to inherit those assets or assume rights over your health and financial decisions. Updating these beneficiaries will ensure all your assets and future decisions are in the right hands.
Shifting priorities: Have you decided that you want to give a greater portion of your assets to charity, or has a former beneficiary of yours proven they aren’t ready to take on the responsibility of your wealth? If your priorities or opinions change, you’ll need to update your documentation to reflect them.
Changes in wealth: If your wealth has taken a major upswing with the acquisition of new assets or even a downturn, reviewing your estate plan ensures the distribution of your wealth is in line with what the estate actually looks like today. You may need to set up new trusts to hold new assets or reevaluate the percentage of wealth your beneficiaries receive.
When you review your estate plan, make sure you’re not only paying attention to wills and trusts, but also retirement plan beneficiary paperwork and other similar designations. These forms override your will and trust, so you want to be certain they’re up to date, as well.
The dangers of letting your estate plan fall out of date
If you never update your estate plan to match your current living or familial situation, your heirs may be in a bit of trouble upon your death.
An outdated will may need to go through longer or more complicated probate court as the rightful beneficiaries are identified and assets that were unaccounted for are divided. Trusts and other funds you may have intended for certain people could be passed along to others you don’t like, should those beneficiaries die before you.
And, should you become incapacitated, but your health and financial powers of attorney are people you’ve had a falling out with or who have passed away, your health and financial futures could be in the hands of someone you do not trust.
How often should you revisit your estate plan?
It’s generally a good idea to revisit and update your estate plan after major life changes, such as those listed above. However, making an effort to routinely review the plan with your financial advisor in Los Angeles every few years can also be helpful so you can ensure the future of your estate is in the proper hands.