Once you have an effective estate plan, it is important to realize that this may only be efficient for a short period of time. An estate plan is a dynamic financial tool and evolves constantly, for many reasons.
To maintain an effective estate plan you must be aware of any and all changes that affect your estate and make any updates or changes to your plan to account for them. However, no changes can be made in an irrevocable trust.
You should review your estate planning documents and gifting strategies regularly and go over them with your attorney and/or tax professional to make sure everything is still appropriate to your goals.
The changes to your estate that will require immediate attention will generally fall into three categories:
In addition to unexpected deaths and disability, as you, your children, and other beneficiaries age or change over time it may have an effect on your estate plan.
Here are a few things to consider.
There will likely be other major life events such as birth, marriage, and divorce that could result in a major change or update of the beneficiaries and distribution of your estate. Some of these events may include change in relationships.
If handled well, your assets will increase in value over time as they grow and are added to. They may decrease.
A job change can result in the need for an update. For example, they may have a better retirement plan than your existing one which may require a transfer into your new employer’s plan.
State laws are highly variable and you have to be aware of them.
It is crucial to research all applicable laws when you create your estate plan, move to a different state, or acquire assets in or move assets to a state you are not currently living in.
Federal and state estate planning laws and the tax code are constantly changing.
Even if you don’t think there are any changes, you should review and consider revisiting your estate plan every 3 to 5 years.
Like anything to do with estate planning, you have to provide the correct documentation for any changes. You may need to have some of them witnessed or notarized before they are valid.