You’ve signed your estate plan – congratulations! The most important step is complete. But the next most important step with respect to your estate planning is yet to come.
That step is to review your plan as time passes. Here are five reasons why you might need to update your estate plan in the coming years.
- When Your Personal Life Changes, Your Estate Plan Should Change Too
Your estate plan was designed for the person you were at that moment. It aligned with the circumstances at that time, meaning that you might have chosen a guardian for a recently born child, or decided which sibling should receive that family heirloom. But, as your life changes, your wishes may change too. The person you designated to care for your children in your absence may not continue to be the best fit for that role. Additionally, the people you name to serve as Power of Attorney or Health Care Agent will get older and may no longer be suitable. Being mindful of these potential changes is part of solidifying your estate plan’s foundation, so that when it is needed, it accomplishes your wishes and goals.
- Financial Changes
As you advance in your career, you acquire more assets, and the assets you have will grow in value. A plan designed for a young couple starting their careers may not be the best fit for that couple as they age and grow more concerned about protecting their assets as well as their families. Investments in cryptocurrency and other digital assets may necessitate a review to be sure that your plan addresses the unique attributes of these different asset classes. A Trust may be an excellent vehicle to manage these assets, but documents that are missing important language or improper trust funding can create future complications.
- Changes in the Law
Just as your life changes, so do the laws that impact estate planning. Laws regarding taxation–including estate and income taxation–change on a regular basis. Your plan should optimize the benefits of existing laws and mitigate the potential negative consequences of legislative change. Witness the recent change to the estate tax law in Massachusetts, which increased the exemption for the first time in seventeen(!) years. A properly designed plan may be able to anticipate such changes, but it is always worth a review and a check-in with your estate planning attorney to be sure.
- Changes in Goals/Outlook
When you are young, your primary concern is protecting your spouse and children in the event of the unthinkable. As you and your family age, while that priority remains, your children will grow and have families and careers of their own. If their financial dependence becomes less important, your thoughts may turn to individuals or organizations to whom you wish to leave some or all of your legacy. You may want to adjust your plan to protect your children’s inheritance from creditors, be it due to poor financial decision making on their part, or due to a change in family circumstances like divorce. Such protections may not make sense when your children are young and your legacy is smaller, but as your legacy grows along with your children, protecting that legacy is more important than ever.
- Changes in Health
As retirement age approaches, concerns about long term care and creditor protection may necessitate a review and revision of your existing estate plan. The cost of elder care and health care is ever increasing. A review and change to your estate plan may be the key to ensuring that your loved ones are not left behind in the event of a health crisis. With a properly designed plan, the legacy you have worked so hard to build can last for the next generation.
While creating an estate plan is a very important step, it is not the only step. Now, you must make sure the plan you’ve created continues to protect you in the future. A periodic review of that plan with your estate planning attorney is the best way to protect your loved ones and preserve your legacy against life changes, be they personal, financial, or legal.
Justin B. McCarthy is an Estate Planning attorney at the Boston-based law firm Conn Kavanaugh Rosenthal Peisch & Ford, LLP.
He can be reached at jmccarthy@connkavanaugh.com
Share with your network:
