Do I Need To Update My Estate Planning Documents?

“Man plans, God laughs.” So goes the old Yiddish proverb, which applies to all aspects of human endeavor, including financial planning. Creating an estate plan is a sound practice to protect assets and direct their distribution. But when God laughs, it may be time to change course.

“Many significant life events would prompt a person to alter their estate plan,” says Pinni Bohm, an estate planning and probate lawyer at Bohm Law Firm in Brooklyn, New York. These include illness or disability, separation or divorce, retirement or acquiring new assets, or having more children.

Disputes among parents and children or other beneficiaries, or the need or desire to change the plan’s executor, can also trigger changes. 

As Life Changes, So Should Estate Plans

In addition, an attorney may recommend that a client change their estate plan to minimize federal or state estate or inheritance taxes, or for other personal or business purposes, says Jerald D. August, a tax attorney at August Tax Law in Blue Bell, Pennsylvania.

“Changes can also be driven by tax savings such as gifting strategies or revisions to the articles or agreements of a family business or family investment partnership or trust,” he adds.

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Major Life Events To Potentially Reconsider Your Estate Plan

Consider how these major life events might affect your estate plan, be it a last will and testament, living trust, or other document:

• Having a child
• Illness or disability
• Separation or divorce
• Retirement
• Buying a house
• Disputes among beneficiaries
• Changes in tax and estate law

Many significant life events would prompt a person to alter their estate plan.

Review Your Estate Plan Regularly

Estate planning experts recommend that you review your plans regularly. “I recommend that you review your estate and/or health plan yearly during tax season,” says Gina T. Danetti, an elder law attorney at Chalgian & Tripp Law Offices in Southfield, Michigan.

“If there are changes with mental or physical health, marriage, divorce, children born, death of spouse, changes in net worth, change of intentions or desires, or changes to applicable laws, you should contact your estate planning attorney for a consultation. If there are no changes, I advise you to review your plan with your attorney every five years.”

Changes can also be driven by tax savings such as gifting strategies or revisions to the articles or agreements of a family business or family investment partnership or trust.

Changing Estate Planning Documents

The process of making changes can range from easy to complicated depending on the legal documents involved, says August. “Whether a simple codicil (an addition to an existing will) sufficea in a given instance is based on identifying the problem and the solution,” he says. 

“If one wishes to update a trust, a simple amendment to the trust agreement might be sufficient,” Bohm adds. “If one wishes to update a will, however, it is usually beneficial to simply execute an entirely new will.” 

Is It Ever Too Late To Change Estate Planning Documents?

How late is too late to change a plan? “The biggest barrier to changing your estate or health plan is lack of capacity,” Danetti says.

“If a person lacks the requisite capacity to understand the nature and consequences of the changes they wish to make, they may have waited too long. It is important to plan ahead. This will avoid potential problems for your beneficiaries.”

Find Legal Help

For more information on estate planning laws and personalized legal advice, reach out to an estate planning lawyer.