WHEN SHOULD YOU REVIEW YOUR ESTATE PLAN?

When should you review your estate plan?
By Steve & Kiley Stuchlik, Attorneys at Law
It’s good idea to review your estate plan on a regular basis, such as every few years, and upon the occurrence of major life events to determine whether changes should be made to your estate plan. Additionally, there may be changes to state or federal tax code or other laws that govern your estate that would make it necessary or desirable for you to revise your estate plan. These are changes that you are not necessarily going to be aware of on your own, which is why it’s important that you keep in touch with professionals, such as an estate planning attorney and tax advisor, regarding your estate plan. 
The following are 6 major life events that necessitate a review of your estate plan:

1. You moved to another state or acquired real estate in another state. Laws that affect one’s estate plan are those that pertain to the vesting of real property, vesting of accounts, intestate succession, will formalities, and probate and trust administration, all of which are state laws, not federal. Some of the differences in state laws can seem trivial, such as the number of witnesses required for a will to be valid. Other nuances are more substantive. Many states, for example, require that a spouse inherit a minimum share of the decedent spouse’s estate, but that threshold varies by state. Also, some states, such as Oregon, impose inheritance or estate taxes, while others, such as Idaho, do not.

State laws vary on other elements of the estate plan, such as powers of attorney, advance medical directives, living wills and more. If you move to a new state, these documents need to be updated.
You also should work with your estate planning attorney to establish proof that you changed your state of residence. This is particularly important when you have a substantial estate and moved from a state with an inheritance or estate tax to a state that does not impose such a tax.
When you acquire real estate in another state, you should review your estate plan to ensure that title to that real estate is held in a manner that is consistent with your estate planning objectives or better yet, contact a trusted estate planning attorney licensed in the state in which you are buying the property before you close the transaction so that your attorney can advise you on the best way to take title to the property in light of your estate planning objectives. Doing so could save you from incurring additional recording fees down the road or from unintended results of vesting language in a deed.   
You can also do some planning to make sure that your heirs do not have to engage in estate administration in more than one state upon your death. As we mentioned in a previous blog, any real property owned in your name (as opposed to owned by you as trustee of your revocable living trust) may be subject to estate administration (probate) in the state in which the property is located. That means that for a decedent who owned real property in his or her personal name in more than one state, the heirs will have to engage in estate administration proceedings in each state in which the decedent owned real property in the decedent’s personal name. That result can be avoided with some estate planning. 

2.     The objects of your affection have changed. For most people, a change in who they desire to leave their assets to happens when there’s an addition to the family, such as the birth of a new child or grandchild. While general language can be included in an estate plan to ensure that these after-born heirs are included (if that’s what’s desired), it’s still a good idea to review one’s estate plan to ensure that a new addition will be provided for based on the language in one’s estate planning documents.  Additionally, revising one’s estate plan to specifically mention a new beneficiary (as opposed to relying on some general language) can help avoid potential conflicts or uncertainty when it comes time for your beneficiaries to interpret your estate plan.There may be instances when it is appropriate to delete someone who is named as a beneficiary in your estate plan. There might be a death or divorce in the family. You also might want to disinherit someone who’s been irresponsible with money or has become estranged from the family. If it’s someone in close relation to you whom you want to disinherit (meaning they may be entitled to notice of the estate administration), it is always better to specifically mention in your estate plan that you do not wish to leave anything to that person (as opposed to just ignoring the person in your estate plan). 

3.     You have been divorced, married or become widowed. Although there are state laws that apply in these situations to keep an ex-spouse from inheriting from a former spouse, it’s still better to revise one’s estate plan and make sure it is current and reflects one’s desires considering the new circumstances. Upon an event such as this, it is imperative that you check with your account holders (bank, investment, etc.) and life insurance company to ensure that your beneficiary and payable on death forms are current. 

4. Your assets or liabilities have changed. A significant change in the value of your estate since your estate plan was drafted necessitates a review of your plan, whether the estate’s value has increased or decreased. You need to review how the property is divided and decide if that still is what you want considering your new circumstances.A change in the composition of your estate also merits a review. You might have sold an asset, such as a business or real estate, that was a major part of the estate. Or you might have added such an asset. Either change means a review of your plan is in order.

5.    Your beneficiary designation for your qualified retirement plan is outdated. One of the major mistakes in estate plans is failing to update the beneficiary designations of IRAs, 401(k)s and other retirement plans. The beneficiary of these accounts is determined by the beneficiary designation form on file with the plan, not the language of your will or trust. If the value of your account has increased substantially you may wish to add a beneficiary, which must be accomplished by contacting your plan administrator and executing a new form. 

6.   Executors/trustees or guardians become inappropriate. The executors and trustees are the people who implement your plan and often determine how successful it is. Persons you nominate as guardians for your minor children will care for them in the event you and the other legal guardian pass away. Even when the appointments were made carefully at first, circumstances might have changed with respect to those individuals such that they are no longer an appropriate choice. Carefully reconsider the people appointed in your estate plan. Are they still able and willing to perform these jobs as you’d like them done? Has your estate or circumstances changed such that someone else is now a better choice for these roles? Has anyone aged, relocated, or passed away? Determine who is the best choice for these positions today.

​If you’ve had a major life event and want to discuss how that event impacts your estate plan or have reviewed your plan and want to make changes, we’re here to help.