Creating an estate plan helps protect you and your family for the future. It is one of the most responsible things you can do for yourself and your loved ones.
While the first step is establishing a plan, there is a time where you may need to make changes after some important life events. Life doesn’t stand still, and neither should your estate plan.
Without regular updates, your estate plan could be outdated, ineffective, or even lead to unintended consequences. Here is what you need to know about the importance of regularly updating your estate plan.
When Is the Best Time to Update Your Estate Plan?
Life is full of changes. After any type of major life event, it is time to dust off that plan and make some updates. These can include:
Marriage or Divorce
Getting married means blending lives. You want your estate plan to reflect that. You may want to add your spouse as a beneficiary, executor, or power of attorney.
On the other hand, if you have gone through a divorce, you probably don’t want your ex-spouse inheriting your assets or making decisions on your behalf.
Make sure to update your plan to coincide with your wishes.
Having a Child or Grandchild
Welcoming a new child or grandchild is a momentous occasion. You will want to make sure they are taken care of in your estate plan.
You may want to:
- Name a guardian if something happens to you
- Set up a trust for their future
- Adjust your asset distribution to reflect your growing family
Loss of a Loved One
If a beneficiary, executor, trustee, or guardian passes away, your plan needs to be updated. If you do not make the changes, the court may have to step in. That means they will make decisions for you, many of which may contradict your intentions.
Major Financial Changes
If your financial situation has changed, you should revisit your estate plan. A change in wealth may require different tax strategies or adjustments in how your assets are distributed.
Moving to a Different State
Estate planning laws vary from state to state. If you have moved from or to Wisconsin, your plan may no longer be valid. These state laws affect everything from wills and trusts to power of attorney and probate. A review with an attorney is a smart move.
Changes in Tax Laws
Estate tax laws are never set in stone. They change frequently. If you haven’t looked at your estate plan in years, you could miss opportunities to minimize taxes and maximize what you pass on to your heirs.
What Happens If You Ignore Your Estate Plan
If you don’t keep your estate plan up to date, you could be setting your family up for unnecessary headaches, expenses, and even legal battles in probate. Some of these potential pitfalls include:
- Your assets go to the wrong people: An outdated estate plan may leave assets to the wrong people or let state law decide for you.
- Unnecessary probate delays and costs: Outdated or unclear plans can cause long probate delays, legal fees, and stress for your family.
- Your kids could end up in the wrong hands: Without a named guardian, a judge, not you, will decide who raises your children.
- Your heirs may face higher taxes: Failing to update your plan could lead to unnecessary estate taxes for your heirs.
- Your business could be at risk: Without a clear succession plan, your business could face disputes, disruptions, or financial losses.
How Often Should You Update Your Estate Plan?
Every state plan is different. However, you should review your plan about every three to five years. If you experience a major life event, then update your plan immediately. Even if nothing big has changed, you still want to check in periodically to make sure everything still aligns with your wishes.
Take Time to Review Your Plan
Your estate plan is not a “set it and forget it” document. Life changes and your plan should change with it. Updating your estate plan is a small task now that can make a world of difference for your loved ones in the future.
Now that you know the importance of regularly updating your estate plan, it is time to get the right help. At Collins Law Firm, we offer estate planning, administration, business, and elder law services. Our experienced estate planning team helps individuals like you to build and protect your legacy. Schedule your free and confidential consultation today by contacting us or calling (414) 207-6292.