How Often Should You Update Your Estate Plan?
Creating an estate plan is an important first step in protecting your family, your assets, and your wishes. But an estate plan is not something you should create once and then put away permanently. As your family, finances, property, and goals change, your estate plan may need to change with them.
So, how often should you update your estate plan? There is no single schedule that applies to everyone, but reviewing your plan every three to five years is a good general practice. More importantly, you should review your estate plan whenever you experience a significant life event or change in your financial circumstances.
For clients in Houston and Harris County, Leigh B. Meineke Law Firm can help evaluate an existing estate plan and make sure your wills, trusts, powers of attorney, and beneficiary designations continue to accomplish your goals.
Why You Should Update Your Estate Plan as Needed
An estate plan reflects your circumstances and intentions at a particular point in time. If those circumstances change, provisions that once made sense may no longer be appropriate. For example, you might create a will when your children are young and name your sibling as executor and guardian. Twenty years later, your children may be adults, your sibling may have moved out of state, and your financial circumstances may be completely different. The original documents may still be legally valid, but they may no longer represent what you want.
An outdated estate plan can be almost as problematic as having no plan at all. In some circumstances, it can create disputes among family members or cause assets to pass to someone you no longer intend to benefit.
Review Your Estate Plan Every Three to Five Years
For many people, reviewing an estate plan every three to five years is a reasonable starting point. A review does not necessarily mean that you need to rewrite every document. Instead, an attorney can examine your plan and determine whether changes are necessary. This periodic review is particularly useful for identifying outdated provisions, changes in beneficiary designations, changes in the ownership of property, and developments in Texas or federal law that could affect your plan. The appropriate frequency may be greater for people with complicated estates, business interests, substantial wealth, special needs beneficiaries, or family circumstances that change frequently.
Update Your Estate Plan After Marriage
Marriage is an important reason to revisit an estate plan. If you created your will before getting married, it might not reflect your intentions concerning your new spouse. Marriage can also affect property ownership and the characterization of property as separate or community property under Texas law. If you are entering a second or subsequent marriage, estate planning becomes particularly important. You may have children from a prior relationship, separate property you want to preserve for those children, or other obligations that require careful coordination between your estate plan and any prenuptial or marital agreement.
Review Your Plan After Divorce
Divorce is another major reason to review your estate planning documents promptly. Texas law can affect certain provisions benefiting a former spouse after a divorce, but you should not assume that every aspect of your estate plan will automatically change. Beneficiary designations, trusts, powers of attorney, and other documents may require separate attention. If you are divorced, review your entire estate plan rather than simply removing your former spouse from your will.
Update Your Plan When You Have a Child or Grandchild
The birth or adoption of a child is an important reason to update an estate plan. Parents should consider who would care for minor children if both parents die and how an inheritance should be managed until children reach an appropriate age. A trust may be useful when leaving assets to young beneficiaries because it can provide instructions for how and when those assets should be distributed. The arrival of grandchildren can also prompt changes, particularly if you want to provide for multiple generations of your family.
Reconsider Your Estate Plan After a Death in the Family
If someone named in your estate plan dies, your documents may need to be changed. This could include a deceased beneficiary, executor, trustee, guardian, or person named to act under a power of attorney. Simply leaving the deceased person’s name in your documents may create uncertainty about who should assume that role or receive those assets. A review can also determine whether the death has changed your overall estate planning objectives.
Significant Changes in Your Finances Are Another Reason to Review
You should also revisit your estate plan when your financial circumstances change substantially. Examples include buying or selling real estate, receiving an inheritance, starting or selling a business, acquiring significant investments, or experiencing a substantial increase or decrease in wealth. A newly acquired property may need to be titled appropriately, particularly if you have a revocable living trust. Business interests may require succession planning. Significant changes in wealth may also raise federal estate and gift tax planning considerations. The important point is that your estate plan should account for what you actually own, not what you owned when the documents were originally prepared.
Don’t Forget Beneficiary Designations
Updating a will or trust is only part of maintaining an estate plan. Beneficiary designations on assets such as life insurance policies and retirement accounts should also be reviewed. These assets often pass outside probate according to the beneficiary designation on file with the financial institution or insurance company. As a result, updating your will without reviewing these designations can leave your overall estate plan inconsistent. For example, you could revise your will to leave everything to your current spouse while an old retirement account still names a former spouse as beneficiary. The result may be very different from what you intended.
Review Powers of Attorney and Health Care Documents
Estate planning also involves planning for incapacity, not just death. Your durable power of attorney identifies the person who can handle financial matters if you become unable to do so. Your medical power of attorney allows someone you trust to make health care decisions when you cannot make them yourself. Advance directives and other health care documents can also communicate your wishes regarding medical treatment. These documents deserve periodic review. The person you originally selected may no longer be the person you would trust to act on your behalf, or that individual may have become unable or unwilling to serve.
Changes in the Law Can Also Matter
Changes in Texas or federal law can provide another reason to review an estate plan. Estate planning laws, tax rules, probate procedures, and other regulations can change over time. Even if nothing significant has changed in your personal life, an attorney can determine whether developments in the law warrant modifications to your documents or planning strategy. This is one reason a periodic estate plan review with an attorney can be valuable. The purpose is not necessarily to sell you new documents, but to determine whether your existing plan continues to work as intended.
Don’t Wait for a Major Life Event
The best time to update your estate plan is before a crisis occurs. If you become incapacitated, your family may have to rely on documents that were drafted many years earlier. If you die unexpectedly, your loved ones will have to administer your estate based on the plan you left behind or, if your documents are inadequate, according to Texas default law. Regular reviews provide an opportunity to catch problems while you still have the capacity to make decisions and change your plan.
Keep Your Estate Plan Current With Help From a Texas Estate Planning Attorney
At Leigh B. Meineke Law Firm, we help individuals and families in Houston and Harris County create and maintain estate plans that reflect their current circumstances and long-term goals. Whether you need to update an existing will, review a trust, change your powers of attorney, or coordinate your beneficiary designations, we can help you determine whether your current plan still provides the protection you intended.
If you have not reviewed your estate plan in several years, or if your family or financial circumstances have recently changed, contact Leigh B. Meineke Law Firm to schedule a consultation and make sure your estate plan is prepared for the future.
