How Often Should You Review or Update Your Estate Plan?
October 17, 2024
Creating an estate plan is one of the most important steps you can take to ensure that your wishes are followed and your loved ones are protected. However, simply setting up an estate plan isn’t enough. Life changes, and your estate plan should change with it. Many people wonder how often they should review or update their estate plan, and the answer depends on a few key factors—primarily your age, how quickly your circumstances change, and shifts in the law.
Life Stages and Estate Plan Reviews
Younger Families: Every 3 to 5 Years
For younger families, estate planning often focuses on guardianship for children, managing financial assets, and ensuring your spouse is provided for. During this stage, life tends to change rapidly, but significant changes like buying a home, having children, or increasing assets typically occur every few years. That’s why a review of your estate plan every 3 to 5 years is often sufficient for younger families.
However, if something major happens, like a new child, a divorce, purchasing life insurance or the purchase of a new home, you should update your estate plan sooner. Waiting until your regular review might leave gaps that don’t reflect your current situation.
Older Families: Review Annually
As you age, it becomes more critical to review your estate plan regularly. Once children are grown, and you start focusing on retirement and long-term care, your estate plan may need adjustments more frequently. Older individuals or families should consider reviewing their estate plans annually to ensure they are up to date with their current wishes, health, and financial status.
Health conditions can change, financial situations may shift with retirement or the need for long-term care, and you may need to consider how taxes or new laws impact your estate. An annual review allows you to stay ahead of any legal changes and make sure your wishes are accurately reflected.
Key Triggers for an Immediate Review
While regular reviews every 3 to 5 years or annually may be a good guideline, certain life events should trigger an immediate update. Some of these events include:
- Changes in Family Dynamics: Marriage, divorce, the birth or adoption of a child, or the death of a loved one.
- Changes in Financial Situation: Purchasing a home, receiving an inheritance, starting or selling a business, purchasing life insurance or significant changes in assets.
- Relocation: Moving to a different state or country where estate laws may differ.
- Health Changes: Serious illness or diagnosis that could affect your long-term care needs.
- Changes in the Law: Estate and tax laws can change over time, and these changes may affect your estate planning strategies.
The Importance of Staying Current
Updating your estate plan is crucial to ensure that your wishes are followed. An outdated plan can lead to confusion, unnecessary legal battles, and potentially higher taxes for your heirs. For instance, if you have additional children after creating your will but don’t update it, they may not be included in your estate plan. Similarly, if tax laws change and you don’t adjust your estate plan, your heirs may end up paying more in taxes than necessary.
Conclusion
In short, how often you review or update your estate plan depends on where you are in life. Younger families can typically review their plans every 3 to 5 years, while older individuals should do so annually. No matter your age, though, significant life events or changes in the law should prompt an immediate review. Keeping your estate plan current ensures that your wishes are honored and that your loved ones are taken care of with as few complications as possible.
If you’re unsure whether it’s time to update your estate plan or need professional guidance, our team at Lawvex is here to help. We specialize in estate planning and are ready to ensure your plan reflects your current wishes and the latest legal changes. Contact us today to schedule a consultation and take the next step in securing your family’s future.