There are many occasions in life when it makes sense to revisit your estate plan. These may come in the form of milestones, unanticipated events involving the beneficiaries or the fiduciaries of the estate, a change in assets or a change in applicable law. It’s important to consider the impact these events may have on your estate plan so that you can seek the appropriate advice regarding any changes that should be made.
The milestones in life that may require a revision to your estate planning documents include purchasing a residence, getting married, having children, having grandchildren, and approaching advanced age. Not only are these events life-changing in their own right, but they may require– or cause you to want — significant changes to your plan. Of particular importance among these events is childbirth and subsequently appointing a guardian or guardians for your minor children. Also, putting a flexible and practical plan in place before reaching advanced age will give you peace of mind and facilitate the management, and ultimately, the disposition, of your property.
Unanticipated events that impact your life or the lives of your loved ones may also require changes to your plan. Divorce (of you or a beneficiary) often prompts a person to revisit his or her estate plan. Sometimes, there are laws in place that make automatic adjustments in your estate plan in the event of divorce. However, these laws vary by jurisdiction and in application and may not reflect your wishes. It is also better to proactively make the changes rather than rely on default, fallback provisions. The death of a beneficiary or fiduciary or a change in your relationship with a beneficiary or fiduciary may also trigger changes to your documents. In addition, careful attention must be paid in the event that you have a beneficiary with special needs who may or may not require government assistance.
A change in assets, large or small, may require attention to your estate plan. For instance, a significant change (or expectation of a significant change) in asset value due to appreciation, investment, increased income, inheritance or trust distribution or termination may not only warrant changes, but may present an excellent opportunity to do additional tax planning. A major liquidity event (or anticipation of a major liquidity event) like the sale of a business may be a good time to revisit your plan. In addition, the acquisition of a different asset or the change in title of an asset may require an adjustment. For instance, assets such as retirement accounts, IRAs, and life insurance policies typically have a designated beneficiary and pass to that beneficiary directly, outside of your probate estate. The disposition of these assets should be coordinated with your overall dispositive scheme so that you can maintain a cohesive estate plan.
Lastly, a change in applicable law is an important time to have your estate plan reviewed. This may happen by a mere change in tax code (income, estate, gift or generation-skipping transfer) or other substantive law, whether local or Federal. A change in applicable law may also be occasioned by a move to another jurisdiction– domestic or international. Some estate plans may be flexible enough to deal with changes in the law but it is crucial to have plans analyzed to confirm this, and if they don’t to make necessary adjustments.
Please do not hesitate to contact us if you have any questions or if you would like to revisit your estate plan.