Most people understand that having an estate plan in place is important. Despite acknowledging this, less than half of all Americans actually have a plan.Â If you are among those who have taken the time to create your estate plan, you are a step ahead of many of your friends and neighbors. More importantly, you can rest easy knowing that you, your loved ones, and your assets are all protected. Or can you? If you created your plan several years ago, and you have not updated your plan since it was created, it may not provide you the level of protection it is intended to provide. The Lincolnshire estate planning attorneys at Hedeker Law, Ltd. remind you that updating your plan is almost as important as creating the plan in the first place.
Why Is Updating My Plan Important?
Ideally, everyone should create an initial estate plan while in their early 20s. Although they may not have amassed a particularly valuable estate yet, there are several other important reasons to have a plan in place. Your estate plan, however, is not something you can create and then forget about if you want it to be effective and work as intended. In fact, having an outdated estate plan in place can be just as bad as not having a plan in place at all. Imagine, for a moment, that you created an estate plan shortly after getting married. Ten years later, the marriage falls apart and you file for divorce. While the divorce is pending, you are in a horrible car accident. Because you never updated your estate plan, you soon to be ex-spouse is still your Agent under a healthcare power of attorney and remains your primary beneficiary for life insurance and other assets. Worse still, he/she is the Trustee of the trust you created for your minor childrenâs inheritance. This is just one example of why updating your plan is so important.
When Should You Conduct a Routine Update?
Every situation is different, meaning that for some people it may be necessary to review and update an estate plan more, or less, frequently.Â As a general rule, however, you should conduct a review and revision of your estate plan as a matter of routine every three to five years during your working and child-rearing years. After that, a review every five to ten years is usually sufficient to ensure that your plan is working as intended.
What Life Events Warrant a More Immediate Update to My Plan?Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
- Marriage and divorce â your own marriage or divorce will necessitate changing beneficiary designations within your plan most likely. The marriage of a child is also something that could trigger a review because your son/daughter-in-law could now stand to gain control over the inheritance you plan to leave your child.
- Birth and death of beneficiaries or fiduciaries — basically, the death of anyone who is part of your estate plan, as a beneficiary or fiduciary, is cause to review your plan. The birth of a child or grandchild should also be specifically noted in your plan to ensure your beneficiaries are properly identified.
- Move out of state — because state laws govern many aspects of your estate plan, moving to a new state should call for a consultation with an estate planning attorney in the new state to determine if any changes to your plan are advisable.
- Retirement â when you retire, a number of important changes will take place, starting with your overall financial picture changing. Those changes warrant a review of your plan. In addition, if you have not yet considered the addition of a Medicaid planning component to your estate plan, now is the time to do so.
- Major change in assets â your estate plan should include provisions that can handle shifting assets; however, a major increase or decrease in the value of your assets, or the acquisition or sale of a major asset (such as your home or business), should give rise to a review of your plan to see how the change impacts your overall plan.
Contact the Lincolnshire Estate Planning Attorneys
Please feel free to download our FREE estate planning worksheet. If you have questions or concerns regarding updating your estate plan, contact the experienced Lincolnshire estate planning attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.