When Should I Update My Estate Plan?

One of the more common questions we are asked as estate planning attorneys is, “when should I update my estate plan?” The simple answer is, whenever you have a substantial life event it is wise to review your plan to ensure that it still works with your goals.

There is a saying in the estate planning community that there are “Five D” life events that are reasons to review your estate plan. We’ve expanded on these “Five Ds” and added a bonus Sixth. These life events can be your own, or events in the life of someone you have nominated as an agent or beneficiary. Some are simple and self-explanatory, while others may be a little more complicated. Read on and find out if now is the time to schedule your own free estate plan review today.

Decade

Have a milestone birthday? Did the calendar change over to a new decade? These are great times to review your estate plan.

Death

The death of a beneficiary, nominated Personal Representative, or agent may mean that your estate plan should be updated. This can ensure that there are appropriate backups in place to act on your behalf or administer your estate, and that there are no complications or unintended distributions hidden in your estate plan.

Diagnosis

The diagnosis of an illness or disease is another compelling reason to review your plan. There may be new goals now and new planning necessary to achieve those goals. Similar to death, a diagnosis of an illness or disease for a beneficiary, nominated Personal Representative, or agent may be an appropriate time to review your own plan as well to ensure that a life changing diagnosis of theirs doesn’t change how you want your estate administered.

Decline

Like a new diagnosis, mental decline is certainly a reason to review your estate plan. Mental decline in yourself can change the goals for your estate planning. This may include planning for in-home care, assisted living, or Medical Assistance, all of which have different considerations when reviewing your plan. Decline in a nominated Personal Representative or other agent may mean that they are not an appropriate administrator for your affairs or estate. In a beneficiary, it may mean that their inheritance would jeopardize benefits that they may be entitled to. All of these are considerations when mental decline is confirmed or suspected.

Divorce

A divorce, or marriage, is certainly an important time to review your plan. While a marriage will certainly change aspects of your estate plan, a divorce can have hidden complications. A divorce generally extinguishes a former spouse’s claim to an inheritance under a Will but there are other provisions that may need to be addressed. Some questions to consider:

• · Are there any specific gifts that were left to your former spouse’s family members?

• · Were one of their family members named as Successor Personal Representative, Trustee, Medical Agent, or Attorney-in-Fact?

• · Is a portion of the residue of your estate left to your former spouse’s relatives?

If your divorce was amicable and you would like your former spouse to continue to be a part of your estate plan, you will need to specifically include them again after the divorce is finalized. If your divorce was acrimonious and you have children together, perhaps you do not want your former spouse to be the custodian of any funds that would be left to your children. That should be specifically stated as well.

While these are important considerations if you go through a divorce, if one of your beneficiaries goes through a divorce, you should verify that your goals for gifting to them are unaffected. This is especially important if there are children involved or if a former spouse is named as a contingent beneficiary or Trustee.

Distribution – The bonus “Sixth D”

Did you receive an inheritance or other windfall that has changed your financial outlook? Depending on the amount or type of asset, a new estate planning strategy may be necessary. For 2023 the Minnesota estate tax exemption is $3 million per individual and the Federal exemption $12.92 million. This means anything in your estate that is above those thresholds is subject to the estate tax and estate tax mitigation planning may be necessary.

While these asset levels are aspirational for most of us, smaller inheritances can also spur the need to change your plan. Do you need to change your beneficiary list or the dollar amount of specific gifts? Did you inherit property that you would like to sell, pass on in your plan, or turn into a family legacy property? An inheritance, whether expected or not, can be a good time to review your own estate plan.

Do any of these common situations sound familiar? If so, we can give you a free, no-obligation, consultation to review your estate plan to ensure it still achieves your goals. Whether we drafted your documents before or not, we are here to help.