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How Often Should You Review Your Estate Plan?

Estate Plan Reviews Help to Deal with Life and Legal Changes


Once you have your foundational estate plan up and running and your assets funded into your Revocable Living Trust, your estate planning should not stop there. Day in and day out things will happen that will affect your estate plan. Here are some things to consider that may warrant a review of your estate plan.

Changes in Your Life

There will be changes in your life that affect your estate plan, such as:

  • Getting married or divorced
  • Having or adopting children
  • Having grandchildren
  • Welcoming a new son-in-law or daughter-in-law into the family (or perhaps not welcoming them)
  • Dealing with the divorce of a child, grandchild or other beneficiary
  • Dealing with the death of a spouse, child, grandchild or other beneficiary
  • Dealing with the incapacity of a spouse, child, grandchild or other beneficiary
  • Inheriting assets from family or friends
  • Selling a business or buying a business
  • Winning the lottery (I know, I wish I had this problem too!)
  • Retiring
  • Buying real estate outside of your home state
  • Acquring new assets but not putting them into your Revocable Living Trust
  • Moving to a new state

Any one of these life changes will have a direct impact on your estate plan for many reasons, such as by making a current provision invalid or requiring the deletion of an existing provision or insertion of a new provision, or necessitating the creation of an entirely new estate planning document. Aside from this, assets left outside of your Revocable Living Trust may require probate after your death. Once your life has settled down after any of the changes mentioned above occurs, be sure to make an appointment with your estate planning attorney.

Changes in the Law

Aside from life changes, there will be changes in tax and estate planning laws at both the state and federal levels that will affect your estate plan. For instance, in 2001, federal rules were put in place that require every Advance Medical Directive to contain specific language to comply with the Health Insurance Portability and Accountability Act of 1996 (or "HIPAA"). If your estate plan has not been updated since 2001, then your Advance Medical Directive cannot contain this required language.

In addition, with the phase out of the pick up tax under the Economic Growth and Tax Relief Reconciliation Act ("EGTRRA") in 2005, some states have chosen to revise or enact their own estate tax laws which have created a state estate tax gap. As a result, estate plans for married couples that maximized planning for federal estate taxes through AB Trusts may result in a state estate tax being due and payable after the first spouse dies, and estate plans for singles that only planned for minimizing federal estate taxes may be out of date. If you live in the District of Columbia or one of the handful of states that collects state estate taxes, or you own real estate located in one of these states, and your estate plan was created before 2005 and has not been updated since, then now is the time to have an update meeting with your estate planning attorney.

While the federal estate tax laws are supposedly permanent, at least for now, it is possible that Congress could act to reduce the federal estate tax exemption in the future. If your estate plan has not been reviewed in the past few years, then it may not have the flexibility to address possible changes in federal estate tax laws which could result in unintended consequences for your beneficiaries.

Another issue that cannot be overlooked is changes to state laws that will affect your estate plan. For example, in October 2011 Florida enacted a new and comprehensive Power of Attorney statute, so Florida residents, or anyone who owns real estate or a business located in Florida, should have their Power of Attorney reviewed to insure that it will work as anticipated when dealing with Florida property.

Formal Updating and Maintenance Programs

If your estate planning attorney has a formal updating and maintenance program, be sure to participate in it. That way you will be assured that at least once a year or once every few years you pull your estate plan off of the shelf and take another look to make sure that it still does what you want it to do.

If your estate planning attorney does not have a formal updating and maintenance program, then you will need to make it a point each year or every few years to think about your estate plan and how your life changes may have necessitated the need for changes in your plan.

The Bottom Line

If you simply allow your estate plan to sit in the drawer without ever being reviewed, then as the years pass by and the time comes for your estate planning documents to actually be put into action, chances are the documents will not work as expected because they will be stale and out of date with current law, not to mention out of touch with your current family and financial situations.

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