The biggest mistake someone can make relating to their estate is failing to create a plan for distributing their assets. In close second is forgetting to review and revise their estate plan following a major life change.
Below are four situations that should prompt an estate-plan review:
1. You have moved out of state
Different states approach probate, estate taxes, medical directives, and powers of attorney differently. If you have recently moved, have an attorney review your estate plan under the rules of your new residence to ensure it remains valid. An attorney can also help you with proof of residence, where applicable.
2. Changing family relationships
Life events can trigger a need to update your estate plan, such as:
- Birth of a child/grandchild
- Death of a family member
Someone might also want to revisit their estate plan if their relationship with a family member who would otherwise inherit has broken down, or has been repaired (if the person was originally omitted from the will).
3. Financial gains or losses
Whether you won the lottery, sold a business, or fell on hard times, changes in your financial situation should trigger an update to your estate plan. Review the plan to ensure the assets you wish to go to charity, trusts, and family members remain appropriate, and are properly strategized, according to your current portfolio.
4. More than three years have passed since you created or revised your estate plan
Changes in tax law or other applicable rules can have a significant impact on your estate plan. Even if you have not experienced any major life events, a review of your plan every few years will allow you to take advantage of (or respond to) changes in the law as well as help to ensure your plan still fulfills your wishes.