One of the things we have learned during this recent pandemic is how important it is to have your estate and financial affairs in order since you never know when you might lose capacity or pass away. One of the questions we most often receive from clients is “how often should I update my will and other estate planning documents?” So, here are our thoughts on when you should update these documents.
- The law changes. Every so often, Congress or the NYS legislature makes changes to the tax, trust or estate laws that may be significant enough to warrant an update to your existing estate planning documents. While some law changes may not apply to your particular situation, the best way to find out is to review your documents with your estate planning attorney. Sometimes, a minor tweak here or there can save you a bunch of money in taxes or protect your estate from creditors, including potential nursing home costs.
- Birth of a new child or grandchild. If it is your first child, who do you want to be his/her legal guardian in case something happens to you? If it is not your first child, are you still comfortable with the person whom you selected to be guardian? Sometimes, through the passage of time, relationships change, and you may no longer wish that person to serve as guardian for your minor children. If you are blessed with the birth of a new grandchild, how would you want that grandchild to be treated if one of your children predeceases you? I know that this is not a pleasant topic to think about, but not thinking about it could cause more problems later on. Some folks prefer the grandchildren to step into the shoes of a predeceased child, while others prefer to treat all grandchildren equally for inheritance purposes regardless of how many siblings her or she may have.
- You, or someone in your family has recently gotten divorced, or is thinking about getting divorced. While, under the law, divorce will terminate certain estate and other rights someone may have under your will or otherwise, this may not always be the case. The key here is to consider making changes to your estate plan prior to a divorce being finalized since relationships have likely changed and the actual filing or consummation of the divorce may take some time. If you were to pass away or become incapacitated prior to making changes, your wishes may not be carried out and your family could end up in costly and time-consuming litigation that could take years to resolve. Keep in mind that you may wish to make changes to your estate plan even if you are not the one involved in the divorce. For example, the possible divorce of a child or other family member could be reason to change your estate plan, especially if you have nominated that person or his/her spouse to serve as a fiduciary of your estate.
- Change in family circumstance. This can be any one of a number of things, including the health of a family member. For example, if someone in your family has special needs, there may be certain kinds of trusts that should be part of your estate plan. Sometimes, the individual is born with a disability and, other times, the special need or disability arises later in life. In either case, it makes sense to review your estate plan to ensure that you are not jeopardizing that individual’s eligibility for means-tested government benefits which could be essential to that person’s quality of life. There may be other issues that could arise in your family due to drug or alcohol addiction, or mental health challenges. All of these situations require special attention during the estate planning process, as well as ongoing monitoring to ensure that your estate plan continues to meet your wishes and desires.
- Your nominated fiduciary is no longer an appropriate choice. We have often said that you can have a perfectly drafted estate plan, but if you do not have the proper fiduciaries the plan will probably fail. It is similar to owning the best horse in a race but not having a good jockey. The executor, trustee, or agent under a power of attorney or health car proxy are the key to making sure your estate plan is carried out the way you would want it to be carried out. So, if the person whom you previously selected to serve in any of these capacities is no longer able to serve, then it is time to update your plan. The person may no longer be able to serve due to death or disability, or your relationship with that person may have changed since the last time you did your estate plan. After all, we are all human and relationships do change over time so please pay attention to this when reviewing your estate plan.
We have discussed just a few of the reasons why you might not want to throw your will and other estate planning documents in a drawer, never to be taken out until something happens to you. There are many more reasons to pay attention to your estate plan as we all go through this journey we call life. So, think of your estate plan as a work-in-progress that will likely need a bit of fine-tuning from time to time.