Establishing a comprehensive estate plan, including a trust, last will, health and financial powers of attorney as well as a living will, is a major step toward ensuring that one’s wishes are carried out during their incapacity and after their death. Reviewing and revising one’s estate plan is crucial in ensuring that a person’s current intentions will be carried out.
The American Academy of Estate Planning Attorneys recommends reviewing estate plans every three to five years. Even small changes in applicable law can have a significant impact on the validity and consequences of the estate plan.
Furthermore, an estate plan should be reviewed around major life events. New beneficiaries might be added as a result of a birth or a marriage. If the grantors wish to provide for the newest members of their families, such as children, grandchildren, or spouses, or if it is necessary to address educational or special needs, or to name a guardian for a minor child, then the estate plan has to be revised. Conversely, a death of a beneficiary, a divorce of the grantor or a beneficiary, or even changed personal relationships might require updates to the estate plan in order to remove no-longer-desired beneficiaries.
Additionally, the illness, disability, or retirement of the grantor, or sometimes even that of a beneficiary, may warrant special provisions in the estate plan to assist those who might require long-term care or will be receiving benefits over a period of time.
A change in one’s assets, such as new purchases, sale of property, or the creation or modification of a business venture, often also warrants a revision of the estate plan. As the estate grows, a revised plan focused on minimizing estate taxes might be necessary. On the other hand, if the assets decreased significantly, an existing plan focusing on tax planning can be revised, and often simplified. Additionally, most business entities will require a succession plan and the designation of a person in charge upon the death of the grantor. And ultimately, as the estate changes, the property list should be updated, and it is necessary to verify that all newly acquired assets are properly in the name of the trust in order to avoid probate.
A state-to-state move can also result in a need for revisions in one’s estate plan. Each state has different laws. Consequently, some elements of the estate plan might not be effective after a move to another state. Similarly, a new state might offer legal solutions and documents previously not available. Finally, it is oftentimes more convenient and financially beneficial for the grantors as well as for the trustees and beneficiaries to administer and interpret the trust under the laws of the current state of residence rather than under the laws of the state where the grantors previously resided.
Obviously, any changes desired by the grantors, such as a designation of different fiduciaries, changed distribution of the estate upon death, or a development of new philanthropic interests, will require revisions to the estate plan.
Mere passage of time is a sufficient reason to review one’s estate plan. The estate plan should be revisited periodically, every three to five years, to accommodate changing laws and personal circumstances.