Estate planning can be a large undertaking. Getting your estate plan finished is an accomplishment. Figuring out how to distribute your estate and equally divide your assets among your loved ones can be hard work. However, you work is never quite done with an estate plan. You might not realize it, but your estate plan needs to be updated periodically in order to be effective.
Why do you need to update it?
If your estate plan is not updated, it can lead to many problems. Changes in your life need to be reflected in your estate plan, otherwise it could lead to disputes among your loved ones. If there are no accurate records of your assets or beneficiaries in your estate plan, your wishes could be misinterpreted after your death.
If your estate plan is not current, your assets will have to be divided according to state law. That means they may not go to the people you intend and your previous, careful estate planning will not be as effective. Regular reviewing and updating of your estate plan will prevent this, but how do you know when you are supposed to make changes to your plan?
When should you update?
As a rule of thumb, you should review your estate plan every three to five years, to ensure that it is accurate. There are also a few life events that will mean you need to update or change your estate plan such as:
- Birth of a new child
- Death in the family
- New acquisitions (real estate, business, etc.)
- Divorce or marriage
- Change to state or federal tax laws
Having an up-to-date estate plan is just as important as having an estate plan in general. Regularly reviewing your estate plan is essential so you can ensure it reflects your wishes and your current life situation.