Five Reasons to Review Your Estate Plan


 Every 5 years

If you already have an estate plan then you are ahead of most Americans. According to one survey in 2020, less than 1/3 of Americans have an estate plan. However, your estate plan may need to change. The will you executed five or ten years ago, may no longer reflect your current situation. That is why you should review your estate plan periodically to make sure it accurately reflects your wishes.

When should you review your plan? This article outlines five key events that may indicate its time to take another look.

1. Family Changes

Whether your family circle has increased or decreased, it is important to make sure that your will is consistent with those changes. The law generally has special provisions to protect spouses and children who are accidentally left out of a will. Washington law also prevents divorced spouses from receiving an inheritance through a will that was executed before the divorce.  Still, an outdated will that fails to include key family members or names a former spouse can cause problems. To avoid an unnecessary legal dispute, you should review your plan promptly if you get married, divorced, or have a child.

Additionally, if relationships with your children change, you may want to adjust how you leave gifts. For example, all of your children may now be over 18 and the trust you set up in your will for their benefit is no longer necessary. Or maybe your daughter married someone who is not good with finances and you want to put additional protections on her inheritance to ensure that she and your grandchildren are cared for.  Whatever the circumstances, major changes in your family life should prompt a review of your estate plan.

2. Health Changes

Many people think about their estate plan when they have a serious health issue or are preparing to go in for a major procedure. This is definitely a good time to review your estate plan, however, it is also important to review your estate plan when other people in your life have health issues.

An important part of an estate plan includes deciding who is going to manage certain aspects of your estate. This includes who you give powers of attorney to, including both health care powers of attorney and general or special powers of attorney. It also includes who you designate to be the personal representative of your estate when you pass or the trustee for any trust you create.  These individuals play an important role in managing your affairs.   The individuals you designate to manage your affairs need to be in good health and have the mental and emotional capacity to make important decisions for your estate.

Additionally, if your spouse, children or other beneficiaries have health issues and it becomes necessary for them to receive state or federal aid, you may be able to modify your will to protect the beneficiary’s ability to receive government assistance.

In any event, if you or your spouse, children, beneficiaries or agents, have significant health changes, then you should review your estate plan.

3. Work Changes

Whether you change jobs, start a new business, or retire, any change in your work life should prompt you to review your estate plan.  A change in your employment may result in changing benefits, insurance, and tax brackets.   For example, if you are transferring a retirement account and you switch from a ROTH IRA to regular IRA, it can have a significant impact on the effectiveness of your estate plan.  If you start your own business, your estate plan may need to include a business succession plan.  Finally, when you retire your financial situation may change in a way that impacts your estate plan.  Each of these changes can have an impact on your estate. So, if you change jobs, you should also see if you need to modify your estate plan.

4. Market Changes

Part of estate planning is minimizing or avoiding estate taxes.  If market conditions fluctuate the value of your invested assets significantly (a good rule of thumb is a change of more than 20%), it could have significant estate tax implications.  A discussion with your estate planning attorney can help you to understand whether a complete rewrite of your Will is in order, or if some other mechanism can be used to reduce your estate tax liability.

5. Law Changes

As times change, so do the laws affecting estates.  Regardless of your political affiliation, who controls the state and federal governments can drastically change the estate planning landscape.  Like a pendulum, often when there is a change between democratic and republican control, laws may swing from one side to the other. As a result, estate tax limits may change or tax laws as applied to leaving certain property at your death may change.

Beyond changes due to elections, you can also be impacted by moving to a new state. The laws may vary significantly from state to state. Any time you move to a new state you should review your estate plan review to ensure it complies with the laws of your new residence. For example, if you move from Idaho, where there is no estate tax, to Washington where there is estate tax on all estates over 2.193 million dollars (including some life insurance proceeds), and you do not update your will, your estate may end up paying tax that could be avoided. So, if you move or you hear of a change in applicable laws, you may want to revisit your plan.

If you… experience changes in one or more of the above areas of your life or you have not reviewed your estate plan with an estate planning attorney in the last 3 years, call your attorney’s office to schedule a time to review your estate plan.  Our attorneys are experienced in guiding client’s through the estate planning review process and skilled in providing the individual attention necessary to ensure you leave with your estate plan.

Contact us today for a consultation.