The two most significant errors people make regarding estate planning are failing to have a plan in place, and second, having a plan but failing to update it when major changes happen in their lives.
Not having a plan can be a costly and troublesome mistake for your heirs. The same is true for not having an updated estate plan, which often leads to family strife and probate challenges over how the estate is distributed.
When should you update your plan?
In general, your estate plan should be reviewed every two to three years by an experienced estate planning attorney. However, you may also need to take action when specific events happen in your life. These include:
- Moving to another state: Estate planning laws are different in each state. Texas has its own nuanced rules, so it’s vital to review it with a lawyer who understands the Lone Star State’s laws.
- Changes in your personal life: The most common times are when a child or grandchild is born, or there’s a wedding or divorce in the family. You may also have a falling out and want to disinherit someone.
- Changes to your estate’s value: Regardless of whether your overall net worth increases or decreases, your plan should reflect significant changes for how you want your estate distributed.
- Outdated beneficiary designations: Disbursements from IRAs, 401(k)s and other retirement assets are not directed by a will or trust but are determined by your beneficiary designation with the plan. Make sure these are up to date.
- Inappropriate or unwilling executors or trustees: The success of your estate plan is, ultimately, in the hands of the people you choose to administer a will or trust. Some grantors don’t put enough thought into this when drafting a plan. Carefully consider whether you’ve made the right choice.
Make sure your goals are still being met
Even when no significant changes to your life have occurred, it’s crucial to have an annual or semi-annual review of your estate plan. Working with a knowledgeable attorney helps safeguard your assets, avoid tax liabilities when laws change and gives you peace of mind that your estate plan protects your family as well as your legacy.