When Should You Update Your Estate Plan?

 Update Your Estate Plan

The factors in your life change over time — and so should your estate plan. As a general rule of thumb, you should update your estate plan at least every 5 years and after any major life events. Updating your estate plan ensures that it remains aligned with your goals and complies with current law. 

Since January 1, 2018, two major law changes have gone into effect significantly altering estate planning strategies for many. The Tax Cuts and Jobs Act, although temporary, drastically changed the Estate and Gift Tax rules. Likewise, the SECURE Act substantially altered the rules around inherited IRAs and 401(k)s. 

In addition to changes in law, people often become more (or less) charitable over time, and changing family dynamics may mean revisions are in order. Your estate plan will also need updating after any of the following major life events:  

Marriage

Following a marriage, you will not only want to name your spouse as a beneficiary, but you may want to appoint your spouse to the crucial roles of: 

  • Executor
  • Financial Agent to handle your financial affairs if you become incapacitated; 
  • Healthcare Agent to make healthcare decisions if necessary; and 
  • Trustee of any trusts you may establish.

Updating your estate plan to reflect changes in your family will avoid conflict, ambiguities, and potentially lawsuits down the road. 

First Child

The birth or adoption of a first child is a major milestone. Naming your child in your estate plan protects your legacy. A new child raises a number of issues that an estate plan should address. For example, you will need to pick a guardian of the child in the case that both parents die. You will also want to consider issues such as at what age do you want your child to receive your assets?  At 18? 25? 35? Do you want all of your assets to pass to your spouse outright now that you have a child, or do you want to take steps to preserve assets for your descendants? These are just a few of the questions that need to be answered and addressed in your estate plan following the birth or adoption of a first child. 

Divorce

Following a divorce, you are probably in need of an estate planning overhaul. Any updates you made after you got married will likely need to be undone. If you have been divorced and remarried since last updating your estate plan, then you should make updating your estate plan a priority. 

Major Change in Financial Status

If you have experienced a major increase or decrease in the value of a business, real estate, or securities that you own, then you should reassess your financial situation and update your estate plan accordingly. A major change in wealth could mean that you want to rethink its allocation among your beneficiaries. Revisions may also be appropriate if you have purchased or sold a major asset. Additionally, a significant wealth increase may require tax planning for an efficient transfer of wealth at your death. 

Health Diagnosis

A poor health diagnosis means it is time to get your affairs in order. You should make sure that your estate plan accurately reflects your desires for when you’re gone. An estate planning attorney can review your entire estate plan, including asset titling and beneficiary designations. You will have peace of mind knowing that you have a solid estate plan in place and that you will have eased the burden on your loved ones as much as possible. 

Retirement

Retirement is a big deal. Many people financially plan for retirement for years, if not decades. However, they often do not think of updating their estate plan. Retirement marks the time for most people when their primary source of income shifts to a source other than their job. Your financial landscape will change dramatically in retirement, and you will want to make sure that your estate plan reflects these changes. Retiring also means that your children are older, perhaps married, and may even have children of their own. There may be outdated provisions in your old documents, and you may want to carve out some inheritance for your grandchildren. 

If changes to your estate plan are needed, a trusts and estates attorney at Bell, Davis & Pitt can evaluate your current plan and work with you to develop and execute a comprehensive estate plan custom-made to meet your needs. 

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About the Authors

Attorney Travis Woolen

Travis Woolen

Travis joined Bell, Davis & Pitt as a trusts and estates attorney shortly after graduating from the University of North Carolina School of Law. Prior to joining Bell, Davis & Pitt, he worked as a loan officer at a financial institution in Raleigh for several years.
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John Cocklereece headshot

John A. Cocklereece, Jr.

John Cocklereece concentrates his practice on property tax appeals, business law, tax controversies, and estate planning and administration.
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