Here at eLegacy, we encourage people to put together an estate plan before they desperately need one. The last thing you want is to have to cobble some sort of plan together when you have been rushed to the hospital with a life-threatening condition, worrying about whether you have properly provided for your family.
Instead, it is much better to prepare ahead of time. You can gather all your information together, make a careful assessment of your financial situation, think about your future plans and future needs, compile a careful record of your assets, and then determine how you want them managed while you are alive or in the event you become incapacitated, and how you want them managed and distributed when you pass away.
Your Existing Estate Plan Should Be Well Thought-Out
To craft a good estate plan, you want to be able to think calmly and engage in talks with your spouse, if you have one, over a period of time. You want to be clear about what you both want, and work out how you would like things to happen under different scenarios. You may also want to have some frank conversations with your children about what you think is important, and what they should expect. You will probably also want to find out if other people are willing to take on any estate responsibilities, such as being an executor of your will, a trustee for a trust, or having power of attorney.
But one thing that you also have to realize is that, when you execute your estate plan documents before you have any desperate need for them, you may find that they may not reflect your wishes and intentions as your life changes over time. So the question is: how often should you review your estate documents once you have created them?
Estate Plans Should be Reviewed Periodically, or When There is an Important Life Event
Most estate planning professionals suggest that you review your estate planning documents at more-or-less regular intervals, such as every three to five years. This is a pretty good rule of thumb, as it refreshes your memory as to what plans you made, and it prompts you to re-evaluate whether your plans still reflect your current wishes and your life situation.
It may sound a bit counterintuitive, but the younger you are, the more often you should probably review your plans. This is because younger people, when they create an estate plan early in life, have a tendency to think that, having gotten ahead of the game, everything is all taken care of and they can just forget about it. The problem is, the younger you are, the more likely it is that your life situation will undergo a lot of changes.
And that’s really the key. Because, whether you are young or old, it is important to review your estate plan every time you experience an important life event that affects your personal situation. Some of the life events that should prompt you to review your plan may include such things as:
- Your marriage or remarriage;
- The birth of a new child or children;
- Your divorce;
- The marriage or divorce of a child or children;
- The birth of a grandchild or grandchildren;
- Receiving a large inheritance;
- The death of a spouse, child, or other heir;
- Diagnosis of a life-threatening or debilitating condition for you, a spouse, or any of your heirs;
- Moving to a new state or country, where the estate laws may be different;
- The purchase or sale of a large asset, such as a house, business, or other investment;
- A dispute or falling out with an heir.
All of these things can change your perspective on how you want your assets managed, who you want to manage your assets or estate, or how you would like your assets distributed upon your death.
Having said this, you are not required to change anything just because your situation has changed, but it is good to review your documents to make sure they still reflect your intentions and goals. In fact, if you had the opportunity to carefully make your estate plans the first time around, chances are that you made provision for a large number of these contingencies (such as the arrival of grandchildren) when you originally drafted your estate plans, and you may not want to change much.
But even if you do make changes, you do not have to re-do everything from the get-go. If your documents are fundamentally sound, it is relatively easy to make minor changes and re-execute new estate planning documents when you need to, with very little cost and in relatively short order.
If you have put careful thought into your estate planning documents, your periodic review should be pretty straightforward. But if you wait too long and let too many life events happen before re-assessing your estate plans, you may find that you have to overhaul your entire plan.
If you need to craft an estate plan, or if you would like us to review your existing estate planning documents in light of changed circumstances, we are here to help. Contact eLegacy today for a complimentary consultation.