Although there’s no hard-and-fast rule about when you should review your estate plan, the following suggestions may be of some help:
- You should review your estate plan immediately after a major life event
- You’ll probably want to do a quick review each year because changes in the economy and in the tax code often occur on a yearly basis
- You’ll want to do a more thorough review every five years
Reviewing your estate plan will not only give you peace of mind, but will also alert you to any other changes that need to be addressed.
There will be times when you’ll need to make changes to your plan to ensure that it still meets all of your goals. For example, an executor, trustee or guardian may change his or her mind about serving in that capacity, and you’ll need to name someone else.
Other reasons you should do a periodic review include:
- There has been a change in your marital status (many states have laws that revoke part or all of your will if you marry or get divorced) or that of your children or grandchildren
- There has been an addition to your family through birth, adoption or marriage (stepchildren)
- Your spouse or a family member has died, has become ill or is incapacitated
- Your spouse, your parents or other family member has become dependent on you
- There has been a substantial change in the value of your assets or in your plans for their use
- You have received a sizable inheritance or gift
- Your income level or requirements have changed
- You are retiring
- You have made a change in your estate plan (e.g., you created a trust or executed a codicil to your will)
While trusts offer numerous advantages, they incur up-front costs and often have ongoing administrative fees. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional and your legal and tax advisers before implementing such strategies.