Estate planning is an essential part of ensuring that you know what will happen with your assets and loved ones after your passing.
While it’s easy to think of estate planning as a one-time task, it’s important to regularly update your estate plan to reflect changes in your life and financial situation. Here are four reasons to consider updating your estate plan.
1. Major life events
Significant changes in your life, such as marriage, divorce, the birth of a child or the death of a family member, should prompt a review of your estate plan. For example, you may need to adjust your will to include a new spouse or child or remove a former spouse as a beneficiary. It’s also important to update your estate plan if you’ve experienced a change in your relationship with an executor, trustee or beneficiary.
2. Changes in financial circumstances
A significant shift in your financial situation may warrant adjustments to your estate plan. This could include the acquisition of new assets, such as real estate, stocks or a business, or the disposal of previously held assets. In addition, changes in your net worth, either positive or negative, may affect your estate planning strategies, such as the establishment of trusts or the allocation of assets among beneficiaries.
3. Tax law revisions
Tax laws are constantly evolving, and changes in federal or state tax regulations may impact your estate plan. Staying informed about tax law revisions and adjusting your estate plan accordingly can help minimize your estate’s tax burden.
4. Changes in personal values or goals
As you progress through life, your values and priorities may shift, and your estate plan should reflect these changes. Perhaps you’ve developed a passion for a specific cause or charitable organization and want to include them as a beneficiary in your will. Or maybe you’ve decided to establish a trust for the education of your grandchildren.
It is important to treat estate planning as an ongoing process rather than a one-time event. By knowing when to update your plan, you can ensure that your estate plan remains relevant and effective in protecting your assets and loved ones.