Some reasons to update your will are more obvious than others, like marriage, divorce, remarriage, births and deaths. However, those aren’t the only reasons your estate plan needs to be reviewed, explains a recent article appropriately titled “When it comes to a will or estate plan, don’t just set it and forget it” from CNBC.
Think of your estate plan like your home. They both need regular updates and maintenance. If your house starts to get rundown or the roof springs a leak, you know you need to get it fixed. Your estate plan is not as visible. However, it is still in need of ongoing maintenance.
Health events should be a trigger, yours or people named in your will. If the person you named as your executor becomes ill or dies, you’ll need to name a new person to replace them. The same goes for a guardian named to care for any minor children, especially if you named a grandparent for this role.
If you move, your estate plan must ‘move’ with you. Each state has different laws regarding how estates are administered. In one state, an executor living out of state may be okay. However, in another, it may make the executor ineligible to serve. Inheritance tax laws also vary.
Any time there is a large change to your personal wealth, whether it’s good or bad, your estate planning attorney should review your plan.
The same goes for a change in parental status. The birth of additional children seems like it might not require a review. However, it does. You don't want to accidentally disinherited children by not updating your trust or will. Likewise, the same person who may be willing to be a guardian for one child, may find taking on two or three children to be too much of a challenge. If you want to change the guardianship, your estate plan needs to be updated.
A change in your relationship with fiduciaries also merits an update. Someone you named ten years ago to be your executor may no longer be a part of your life, or they may have died. Family members age, retire and move and siblings have changes in their own lives. Reviewing the executor regularly is important.
If a family member becomes disabled, you may need special needs planning.
A commonly overlooked trigger concerns mergers and acquisitions of financial institutions. If your bank is the executor of your estate and the bank is bought or sold, you likely have a new executor. Do you know who the person is, and do you trust their judgment?
Beneficiaries need to be checked every few years to be sure they are still correct. If your life includes a divorce and remarriage, you could be like one man whose life insurance proceeds and property went to his new spouse. His daughter was disinherited because he failed to update his will.
It doesn’t take long to review an estate plan or beneficiaries. However, the impact of not doing so could be long-lasting and cast a negative light on your legacy. If you are in the Madison, Wisconsin area, reach out to Rick Coad for a review of your estate plan. You can start by booking a call with him.
Reference: CNBC (March 1, 2022) “When it comes to a will or estate plan, don’t just set it and forget it”