3 Key Reasons Why You Need to Keep Your Estate Plan Updated

When it comes to creating a Will and other estate planning documents, you should keep in mind that you need to revisit them many times before they actually are needed.

It’s generally recommended that you give these documents a checkup at least every few years unless there are reasons to do it more often. Unique situations such as marriage, divorce, birth, or adoption of a child require a review. Also, coming into a lot of money (i.e., inheritance, lottery win, etc.) or moving to another state where estate laws differ from the one where your Will was drawn up requires a review.

“One of the main considerations for a review is ... when there’s a major change in your life,” said Nick Foulks, who oversees client engagement at Great Waters Financial in Minneapolis.

Here are some key reasons why you should always keep up to date with your estate plan. 

People and/or life situations change

Although your Will is generally all about you, there are other people you need to rely on to carry out your wishes. This is why it is important to review who you’ve named to be your executor.

This is typically a big responsibility. Things such as liquidating accounts, ensuring your assets go to the proper beneficiaries, paying any debts not discharged (i.e., taxes owed), and even selling your home could be among the duties undertaken by the executor. You also need to be sure the guardian you’ve named to care for your children is still the person you’d want in that position.

Additionally, as part of estate planning, it’s common to create other documents related to end-of-life issues. For example, you can assign powers of attorney to trusted individuals to make decisions on your behalf if you become unable to at some point. Often, the person who is given this responsibility for decisions related to your health care is different from whom you would name to handle your financial affairs. 

Even if you’ve had no major life event, individuals you previously chose to handle certain duties may no longer be your number one option.

Account beneficiaries need a review

Certain assets pass outside of the Will, including retirement accounts such as 401(k) plans and individual retirement accounts, as well as life insurance policies. This means the person named as a beneficiary on those accounts will generally receive the money no matter what your Will states. 

“You definitely see that happen,” Foulks said. “We’ve seen accounts left to an ex-spouse and then the family has to go through a court process to try getting it back.”

Be aware that 401(k) plans require your current spouse to be the beneficiary unless they legally agree otherwise.

You may need to consider a trust

If you want your kids to receive money but don’t want to give a young adult — or one prone to poor money management/other concerning behaviors, you can consider creating a trust to be the beneficiary of a particular asset.

A trust holds assets on behalf of your beneficiary or beneficiaries and is a legal entity dictated by the documents creating it. If you go that route, the assets go into the trust instead of directly to your heirs. They can only receive money according to how (or when) you’ve stipulated in the trust documents.

You can read the full CNBC news article here.

If you are interested in learning more about estate planning, download Attorney Michael Monteforte's FREE book, "Planning Ahead" to learn the basics. 

Don't put off calling us any longer. There is no better time to plan for the future than now! If you are ready to speak to one of our experienced lawyers about completing or updating your estate plan, book a Strategic Planning Session with us at www.BookMyPlanningSession.com!