When should I review my estate plan?

With the federal tax deadline approaching, now is a good time of the year to review an estate plan. Preparing to file a tax return provides a good snapshot of one’s assets and finances. One main element of the initial estate planning process is a review of assets and finances, so preparing to file a return is an excellent time to review an estate plan or start a plan since much of the documentation has already been gathered.

Change in circumstances

An estate plan should be reviewed if there is any major change in circumstances or life changes. For example, a married couple who completed an estate plan 2 years ago recently had a child. Their estate plan needs to be reviewed, since that old estate plan may not have any provisions regarding their child. Alternatively, a couple preparing to file their tax return may realize that their financial situation has changed greatly since their last estate plan. For example, their estate plan from ten years ago was completed when their combined income was $100,000 and they had few assets. In the ten years since that estate plan, the couple now has combined income of $200,000, plus own two homes and have significant financial investments. Their ten-year-old estate plan may no longer best protect this couple and their assets.

Other changed circumstances also lend to a review of an estate plan. Death and divorce are two unfortunate events that often require an assessment. Often, though, calling the estate planning lawyer during these difficult times is not high on the list of things to do. For example, a married couple may list one another as major fiduciaries in their estate plans. After an acrimonious divorce, it is likely their no longer wish to have each other as their major fiduciaries. Thus, their planning documents should be revised.

Old estate plan

The question usually arises “when should an old estate plan be reviewed?” There is no hard and fast rule about conducting a review. For example, a young couple with plans to have children may need a review every 2-3 years, while a retired couple on fixed incomes without children would need a review on a longer time line, such as 5-7 years.  An estate plan older than ten years should probably be reviewed, as laws may have changed in that time that impact their plan. An older estate plan should also be reviewed because it may no longer be comprehensive, as laws may have changed that permit additional elements be added to an estate plan. For example, with the legalization of same-sex marriage, a homosexual couple who completed an estate plan ten years ago likely has many more planning options since they may now legally marry.

To review a current estate plan or start a new plan, please contact contact Benjamin Long of Schmidt & Long.