Once you have your foundational estate plan up and running and your assets funded into your Revocable Living Trust, your estate planning shouldn't 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
- Inheriting assets from family or friends
- Selling your business or buying a business
- Winning the lottery
- Retiring
- Buying property outside of your home state
- Moving to a new state
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 into place that require every Advance Medical Directive to contain specific language to comply with the Health Insurance Portability and Accountability Act of 1996 (or "HIPPA" Act). If your estate plan hasn't been updated since 2001, then your Advance Medical Directive won't 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 when the first spouse dies, and estate plans for singles that only planned for minimizing federal estate taxes may be out of date.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 following states - Connecticut, Delaware, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, Tennessee, Vermont, or Washington - and your estate plan was created before 2005 and hasn't been updated since, then now is the time to have an update meeting with your estate planning attorney.
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'll 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 doesn't have a formal updating and maintenance program, then you'll 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 estate plan. Otherwise, when the time comes your estate plan won't work the way you thought it would.
