At eLegacy, we think it is a good practice for people to put together an estate plan before they think they will actually need them. You don’t want to be forced into hastily putting together a plan because of some catastrophic event, when you will not have time to carefully think through how you want your assets managed and when it is easy to overlook something important.

But the necessary requirement of crafting an estate plan early is that you have to be prepared to review it periodically. As your financial situation, family situation, priorities, and interests change over time, you want to make sure that your estate plan reflects your current thoughts and goals about how you want to manage your assets.

And while it is relatively easy to make small adjustments to your estate plan over time–for example, when a new child or grandchild is born, or when you acquire a new asset–there are some circumstances under which it may just be a better idea to start over, rather than try to amend an old estate plan.

Situations That May Call for a New Estate Plan

Significant Changes in the Law: In 2018, the tax reform law passed by Congress incorporated a number of changes, including a doubling of the estate tax exemption from over $5 million to just over $11 million. This is just one example of how a change in law might prompt you to completely re-do your estate plan, rather than simply modify it. 

For example, if you created an estate plan prior to the enacting of the new law and your estate was valued at $10 million, chances are, you created a lot of instruments in your estate plan designed to avoid estate taxes. The change in tax law made a lot of those instruments unnecessary. Moreover, it is possible that the prior tax structure may have prompted you to arrange your assets in ways you may not have been entirely comfortable with. Rather than tweak your existing plan, it might be wiser to start essentially from scratch, even if some of the things in your prior plan still work. It would be a mistake to make minor changes and then discover that you overlooked some elements that also needed amendment.

And it is not just federal estate tax changes that can influence your estate plan, or only when you have a large estate. Changes in capital gains tax rates, income pass-through provisions, deductions, and other matters may prompt you to reconfigure your estate plan to take advantage of new strategies or loopholes that will reduce your tax liability, increase your estate’s assets, or achieve other goals.

Changes in state law can similarly affect your estate plan–and this includes moving from one state to another. While most states will respect estate documents drafted in another state, that is not always the case. Moreover, one state may interpret legal language differently, and they may have different exclusions and exemptions. At the very least, after relocating to another state, you should have an estate attorney review your pre-existing estate documents to determine whether any significant revisions or re-drafting is necessary.

Significant Changes in Your Financial or Personal Situation: If you inherit a large sum of money, win the lottery, or your business suddenly takes off, it is probably wiser to create new estate documents than to revise old ones. The same is true if your fortunes take a significant downturn. When your financial status is significantly different than when you drafted your pre-existing plan, your old estate documents simply won’t work. 

Changes in your personal situation, such as divorce or the loss of a child or spouse, can also be occasions that call for re-doing your estate documents. Again, at the very least, you will want to have an attorney review your documents top to bottom and to make necessary revisions. For example, you will probably want to make sure your ex-husband is no longer listed as the beneficiary of your hefty 401(k) account. The fact is, it is easy to forget to make necessary changes, particularly when you are probably making a lot of other adjustments in your life.

In general, estate instruments that were designed to work in a specific situation do not apply well to a dramatically new set of circumstances, and it makes little sense to try to make alterations at the edges when it is clear that a whole new approach needs to be taken.

When you Have Failed to Make Small Adjustments Over Time: Just as a significant change in your financial or personal circumstances calls for re-doing estate documents, people who fail to make incremental adjustments to their estate documents as time goes on will find that documents they may have created 10 or 15 years prior reflect a situation that is so far removed from their current circumstances that they are not worth revising. 

These are a few of the situations in which you should re-do your estate plan. At the same time, it is important to review your old documents to take note of those items that you may want to retain, or to rediscover why you decided to arrange matters in a certain way. In fact, this is a good way to help you make decisions about how to construct your new estate plan. 
If you need help with putting together estate documents, contact eLegacy Law today, and let us help you craft a comprehensive estate plan. It will give you peace of mind to know that you have taken care of those you love, now and long into the future.