Individuals often ask us, whether they created their estate planning documents with Ansell & Anderson or another attorney in the past, how often they should update their estate plan. The answer to this question depends on several factors.
Has your family situation changed dramatically since you signed your estate planning documents?
Marriage, divorce, disability, the birth of children, or the death of your spouse or another intended beneficiary may change your intentions. Your documents may have been drafted to anticipate some of these changes. For example, a Will or Trust generally indicates who will receive an intended gift if the designated recipient does not survive you. Similarly, you may have already designated alternate Executors and Trustees in your documents. But the appropriateness of these individuals can change over time. Each of your documents should be reviewed periodically to be certain that the people you have named as fiduciaries are still the people you would want to serve in these roles. This review should also include the beneficiaries designated on your life insurance policies, retirement accounts, annuities and other payable-on-death accounts. I recommend that you review your documents at least once a year to address changes in your family situation.
Has your financial situation or asset profile changed dramatically since your estate planning documents were signed?
Significant changes in your wealth may affect your current intentions. Specific gifts may need to be adjusted or deleted if the value of your estate has declined significantly. Alternatively, if your estate has increased appreciably, a continuing Trust may be considered in lieu of an outright gift to individual beneficiaries. The purchase of real estate in another state may also prompt a review of your estate plan in light of the application of the other state’s laws. The purchase of a sizeable life insurance policy might prompt a review of your estate plan, to determine appropriate ownership and beneficiary designations. Similarly, changes in your estate plan may be needed when you retire and lose a significant group term life insurance policy. I recommend that you review your estate plan whenever your financial situation changes dramatically.
Do your documents need to be revised as a result of changes in the applicable law?
Although we routinely advise our clients of changes in federal and state law which affect estate planning in general, we do not review a client’s documents unless we are expressly asked to do so. Often, the application of new laws needs to be considered in conjunction with changes in the personal and financial situation of our clients. Accordingly, I recommend that you meet with your attorney for this review every five to seven years.
In particular, if you have not updated your estate plan in the last five years, the significant changes in the federal estate tax exemption may result in unintended consequences upon your death. Many clients updated their estate plans as a result of the increased estate tax exemption in 2013, but if you have not done so, you may want to consider a review at this time. In 2017, the exemption from gift, estate and generation skipping transfer tax was increased again, doubling from $5,000,000 to $10,000,000. Against the backdrop of the dramatic change in wealth transfer taxes, we encourage you to review your estate plan to determine how these changes in tax law affect your plan and if in light of these changes, modifications to your plan are advisable.
If you think it is time for an update to your estate plan, Christine or I would be happy to meet with you to discuss the changes that would be appropriate to your estate plan at this time.