It is a common misconception that once the estate plan is prepared and executed, it does not require any further attention.
Consequently, after the grantor’s death, the trustees oftentimes face a difficult task of administering the estate that is disorganized and incomplete.
At best, the person in charge of the estate has to commit additional time and resources to organize the estate.
At worst, one’s wishes and desired distributions are not followed.
One of the main reasons triggering the need to review the estate plan are major life events. Marriage or birth may lead to the need to add new beneficiaries.
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.
Furthermore, 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 time.
Additionally, a revision of the estate plan is often warranted when there is a change in one’s assets, such as new acquisitions, sale of real property, or the formation or modification of a business venture. Moreover, a growing estate might call for a revised estate plan focusing on minimizing estate taxes. On the other hand, if the estate decreased significantly, an existing estate plan focusing on tax planning can be revised, and often simplified. Also, most business entities will require a succession plan and the designation of a person in charge upon the death of the grantor. And finally, as the assets within the estate change, the property list or schedule should be updated, and it is necessary to confirm that all newly acquired assets are properly in the name of the trust in order to avoid probate.
Furthermore, as each state has different laws, a state-to-state move can also result in a need for revisions in one’s estate plan. 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.
Lastly, in addition to outside factors, any changes desired by grantors, such as changed distributions of assets upon death or desire to nominate a different beneficiary, will require revisions to the estate plan.
Sometimes even the mere passage of time is a sufficient reason to review one’s estate plan. 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.
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.
Natalia Vander Laan is a Minden attorney.