An estate plan is a document, or set of documents, that detail how your assets will be distributed upon your death. Some common documents in an estate plan include a will, trust or power of attorney.
Setting up an estate plan is a wise and responsible choice. But once you have your estate plan set up, it is important to keep it up to date.
New York law does not require you to update your estate plan but it is generally recommended that you review it every two years, while doing a more thorough analysis every five years.
Signs it is time to update your estate plan
However, some events require updating your estate plan, no matter how long it has been since it was last reviewed. These include purchasing a new home or getting divorced.
Conflict with a family member could also leave you wanting to modify their inheritance or disinherit them entirely. Additionally, statements by a family member that they intend to challenge your will might be a sign to update your estate plan to include provisions addressing this potential challenge.
There are many reasons why you should regularly update your estate plan. One of the main reasons is the assurance that your assets are distributed according to your wishes after your death.
New life events
For example, perhaps you recently got married but did not update your estate plan to include your new spouse. When you pass away, your new spouse could end up not receiving any of your assets.
An outdated estate plan often leads to family disputes and complications in the probate process.
Changes in federal or state law are another reason to regularly update your estate plan. Terms in your estate plan could be deemed legally void if they are not updated to comply with existing laws.
If your estate plan includes a medical or financial power of attorney, you designated someone as your agent when you set up these documents. It is always a good idea to review these documents and change your agent selection if necessary.
Regularly updating your estate plan helps with future tax planning. Taxes can take up a huge portion of an asset, resulting in beneficiaries receiving assets at a reduced value.
Finally, an outdated estate plan often leads to family disputes and complications in the probate process.
Tips for updating your estate plan
Here are some guidelines for updating your estate plan.
Review your agent and beneficiary selections, as well as inheritance amounts to each. Remember to review or name backup agents and beneficiaries.
Communicate with your agents and beneficiaries about their duties and what they can expect to receive from you. Make sure they know where your estate planning documents are located and how to access them.
Today, much of our information is digital. Make sure your agent knows your password to access your digital documents or has any other private information necessary for accessing the documents.
Keeping your estate plan up to date can be crucial to ensuring your loved ones are taken care of and your estate is divided according to your wishes.