Many think of estate planning as a one-time task. It’s actually quite the opposite. To maintain a proper estate plan, you must routinely revisit and update it to reflect important changes in your life. For instance, here are 5 reasons to update your estate plan this year.
1 – New Marriage or Divorce
Marital status is often directly tied to your estate plan. If you are newly married, you may want to add your spouse to your estate plan. If you are recently divorced, you likely need to remove your ex-spouse as a beneficiary. If you are widowed, you may need to assign new beneficiaries or adjust distribution of assets among existing heirs. Marital status is one of the most important reasons to update your estate plan.
2 – Change in Financial Status
When you prepare an estate plan, you evaluate your assets and debts before determining how they should be split among heirs. You must revisit this if you have major fluctuations to your finances. For instance, you may have a new 401(k) plan that didn’t previously exist. Perhaps you sold a home or purchased a new one. Your stock values may have significantly increased from your last review. A business venture may have had a huge payout. Estate planning approaches can vary based on the overall value of your estate, so these types of changes should be a prompt to review your overall estate plan.
3 – New Medical or Health Concerns
A health care proxy and power of attorney are two critical elements of your estate plan. A proxy allows you to designate someone to make medical decisions on your behalf. A power of attorney assigns someone to manage your finances and make other decisions on your behalf. When a major health change occurs, you may want to add or revise these documents.
4 – Moved to a New State
Federal and state laws determine the threshold for inheritance and other taxes on your estate. When you move from one state to another, you should meet with an attorney in your new state to review your existing plan. Given the tax thresholds and other applicable state laws, should you adopt a different estate planning strategy? Should you add or remove certain documents or clauses in your estate plan? A legal review is important to ensure your estate plan is a valid legal instrument in your new state of residence.
5 – Altered Family Relationships
Relationships with family members can change over time. Given how important those relationships are to your specific estate plan, you may want to edit your plan accordingly. This can involve adding or removing beneficiaries, changing guardians for your children, updating health care proxies, or adding/removing a power of attorney.
Other Reasons to Update Your Estate Plan
These are just a few examples of reasons to update your estate plan in Massachusetts. Since estate plans are created to meet your unique circumstances, almost any change in your life may impact your estate plan. Contact us to review and update your estate plan. If you do not yet have a plan, we can assist with preparing one.