Real Estate Law Advisor: Static Estate Planning Strategy Falls Short in Today's Dynamic Conditions
In the fourth instalment of our monthly series on financial planning, we delve into the importance of estate planning – a topic that often gets overlooked but is essential for ensuring your wishes are carried out after you're gone.
An estate plan is not a one-time task. It's a set of living documents that should evolve along with your life circumstances. Legal experts generally recommend reviewing and updating wills, trusts, and related estate documents every 3 to 5 years, or sooner whenever significant life events or changes occur.
Key life events that typically warrant an immediate update include marriage or divorce, the birth or adoption of a child, the death of a beneficiary or executor, changes in financial status or acquiring significant new assets, relocation to a different state with different estate and probate laws, changes in tax laws affecting estate planning, and changes in personal wishes or choice of executors, trustees, or guardians.
Some experts suggest reviewing the will annually, comparing it to how people routinely update insurance and other key documents, to maintain active oversight of the plan.
A pour-over will, a separate legal document, ensures any remaining assets not explicitly named in your will transfer to the trust after you pass away. If you purchase additional property, it's important to make clear who inherits it and understand how it will be transferred.
As your estate grows in complexity, you might consider a professional executor rather than a family member or trusted friend. One important decision is appointing a guardian if you pass away while your children are minors. In such cases, it's advisable to meet with an attorney in your new state of residence to understand transferring assets in that state.
You may also decide to alter the executor of your will or the trustee of your trust based on various circumstances. A specific person should be accounted for in your will or trust to receive digital assets like cryptocurrency.
As you get older, personal life developments such as marriages, births, deaths, and the aging of children may impact your wishes. The selection of a guardian may change as children age or due to health, location, or personal circumstances.
Having an attorney review your documents through a current legal lens ensures your plan remains valid and optimal. If you relocate to a different state, your existing estate plan documents may no longer align with local laws. Tax laws and estate regulations shift frequently and can have a material impact on your estate plan.
In summary, while the standard recommendation is every 3–5 years, the actual frequency should be tailored according to life events, legal changes, or financial shifts to keep the estate plan valid and effective in achieving the individual’s goals. Regular check-ins with a trusted adviser can help you stay ahead of legal changes, avoid costly oversights, and bring confidence that your legacy will be carried out just as you intended.
This article was written by a contributing adviser, not the Kiplinger editorial staff.
- To maintain an effective estate plan, some experts suggest reviewing the will annually, similar to how people update insurance and other key documents.
- As your estate grows in complexity, you might consider a professional executor instead of a family member or trusted friend, especially when managing digital assets like cryptocurrency.
- Key life events such as marriage, divorce, the birth or adoption of a child, changes in financial status, or relocation to a different state may warrant an immediate update to your estate plan to ensure it remains valid and optimal.
