1. Change in Marital Status
A change in your marital status will require significant changes to your estate plan. If you've recently married, then a whole new set of gift and estate tax planning opportunities have become available to you and your new spouse, including tenancy by the entirety, community property, AB Trusts or ABC Trusts, and split gifts. Some of these new options will depend on where you live and where you own real estate. Or, if you've recently divorced, then your estate plan should be updated to insure that your former spouse is removed as a beneficiary and fiduciary and you'll also need to update the beneficiary designations for your life insurance and retirement plans, including IRAs and 401(k)s, to insure that your spouse is removed there as well.
2. Change in Financial Status
A change in your financial status will require significant changes to your estate plan. If you've recently won the lottery or received an inheritance, then you'll need to reevaluate if your estate is taxable at both the state and federal levels and, if it is, then explore techniques that will minimize these taxes. You should also fund your winnings or inheritance into your Revocable Living Trust so that these assets won't need to be probated. Aside from this, you should segregate your winnings or inheritance from your marital assets if you don't want them snatched up in a divorce. On the other hand, if your estate has declined in value, then you should review your plan to insure that it still makes sense in view of your lower net worth.
3. Birth or Death of a Beneficiary or Fiduciary
If a beneficiary or fiduciary named in your estate plan has died, then you should update your plan to remove the deceased person's name. If you don't, then years from now your Personal Representative or Successor Trustee will have to track down an original death certificate for the deceased person, and this can become time-consuming and costly. If your spouse has died, then your plan may need to take on a whole new structure. On the other hand, if you or a beneficiary has adopted or had a child, then you should review your plan to insure that the new child is, or perhaps isn't, included. Suffice it to say that the birth or death of a beneficiary or fiduciary will most likely lead to significant changes in your estate plan.
4. Purchase or Sale of a Business
If you have recently purchased a business, then you should meet with your estate planning attorney to insure that your estate plan is structured properly to deal with the business if you become disabled or after you die, and also to put together a comprehensive business exit plan. On the other hand, if you've recently sold a business, then you should meet with your estate planning attorney to insure that your plan is properly structured now that you don't own a business, that the sale proceeds are titled in the name of your Revocable Trust, and to determine if your estate is no longer, or has become, taxable. If it has become taxable, then you'll need to figure out how the taxes will be paid as well as ways to minimize the estate tax bill.
5. Moving to a New State
Moving to a new state is one of the most important reasons to update your estate plan by meeting with an estate planning attorney in your new state. Why? Because state laws dictate what estate planning documents need to include and how they need to be signed. The last thing that you want is for your estate plan that would have worked well in your old state to be declared ineffective or simply invalid in your new state because of one wrong provision or one missing signature. Aside from this, if you move from a state that imposes an estate tax to one that doesn't, or vice versa, then your plan will need to be updated to take into consideration this change in the taxable status of your estate.
