One issue that commonly comes up with those who have an estate plan in place is when to make changes to that plan. Many feel that because they wrote down their wishes, there is nothing left to do unless they change their mind. While there is some truth to that, there are also other considerations when determining whether a change is needed. Here are some factors:
1. Have the laws changed since your documents were prepared?
The law is constantly evolving and changes could have a significant impact on your estate plan. The changes can be widespread affecting most, if not all, estate plans, or they could be minor adjustments to the laws, only reaching a small minority. Whatever the case may be, the adjustments needed are usually relatively simple, but the consequences on doing nothing could be significant.
2. How current are your Powers of Attorney?
Although Powers of Attorney don’t technically expire with time, there are potential risks of having old documents. The first is the risk of the laws changing. As stated in the previous paragraph, the laws are constantly changing. Some laws could have a serious impact on whether your Power of Attorney has the right language in it to give your agent the authority needed to take care of you if they are ever needed. Then there is the risk of suspicion. The older your document gets, the more a bank, or other institution is going to scrutinize and question its authority. A more current document will usually get a more efficient and consistent result.
3. Have there been any significant changes in your family situation?
Any major change in your family dynamic is something worth talking about with your attorney. Whether you had a new addition, marriage, divorce, a death in the family, or want to add or cut someone out as a beneficiary, it can be extremely helpful to talk to someone who can see the big picture and assess what you need. A good attorney will help you see what is actually needed and structure your estate plan to carry out your wishes and minimized the risk of potential future litigation.
4. Have there been any significant changes in your financial situation?
The laws do not always treat everyone equally. If you just received an inheritance, landed your dream job, or won the lottery, you should have a serious discussion with your estate planning attorney, as well as your CPA and financial planner. Different assets sometimes require a different approach. Real estate may be handled differently from stocks, both in tax planning and asset protection considerations. A larger portfolio has different considerations than a smaller one. The more you have to protect, the more you have to lose if proper planning is not put into place.
Generally, it is recommended that you seek professional advice on your estate plan every three to five years, regardless of whether you have experienced any life changes. In many cases, there is little or no work that needs to be done. However, when changes are needed, ignoring them could be costly.
Written by Pebble Creek Estate Planning Attorney Mark Jacobson