It's a good idea to review your estate plan every two to three years even if you haven't experienced any major changes in your life or of your family.
However, after the occurrence of significant life events such as marriage, divorce, the birth of a child, or adoption it is especially important. Besides those things, there may have been changes in tax laws or changes in your financial situation that call for a reassessment of your estate plan.
DIVORCE OR BIRTH OF A CHILD
Your intent about how your property should be distributed is likely to change over the years, particularly as certain events take place in your life. For example, if you get divorced, you most likely don't want to make the same bequest to your ex-spouse as you may have while you were married.
Under Minnesota law, certain provisions regarding a former spouse in your will can be disregarded while the other parts of the will are to be followed. Also under this state's law, a will that is created prior to a marriage will be superseded by certain spousal rights.
The birth or adoption of a child is another significant event that may require you to update your estate plan. Even if your will already provides for children, it is a good idea to update it each and every time you have a child - or grandchild. It is usually best for you to name each child or grandchild individually in your will. This can avoid disputes later about whether a particular person should or should not receive a bequest. What's more, you can specifically exclude or limit what a child or grandchild will get if you don't want him or her to get a full proportionate share of the estate.
MARRIAGE OR DEATH OF BENEFICIARY
Other major occurrences that may cause you to revise your estate plan are marriage, re-marriage, death of a beneficiary, or the death of an executor or trustee. Minnesota law provides for a share of the estate to go to the new spouse even if the will did not provide for the surviving spouse. If you want to make other arrangements, you may need to have a valid pre-nuptial or post-nuptial agreement to avoid it.
This alternative is especially important for spouses in a second marriage who may have children from a previous marriage. In this case, you may want to provide for the needs of your current spouse during his or her lifetime, but you will want to make sure that your children ultimately inherit your remaining assets. Without proper planning, your current spouse's children could end up inheriting your assets, instead of your own children.
MAJOR CHANGES IN WEALTH OR INCOME
Besides the above changes, there may also be changes in your financial situation. If your present estate plan was made even a few years ago, your net worth may have changed significantly for the better or the worse. This could affect how you want to distribute your estate after your passing. You may need to incorporate more estate tax planning into your estate plan. In addition, tax laws are changing all the time so you may want to consider those in revising updating your estate plan.
IF YOU CHANGE YOUR MIND ABOUT CONTENTS OF YOUR PLAN
Finally, you should analyze what you really want from time to time. You may have changed your mind about various parts of your estate plan.
- Do you want a different person to be the executor or trustee, rather than the one whom you previously selected in your will or trust?
- Did you choose a health care agent for your Health Care Directive (also known as a "Living Will") that now might not be the best choice? Perhaps you selected one of your children as agent but he or she has died, moved away or become disabled.
- Is there something about the way one of your beneficiaries is leading his or her life that would make you want to eliminate that bequest or put it into a trust rather than giving it to them outright?
- Perhaps one of your children has trouble managing money you are afraid that their inheritance will be squandered or that their creditors might end up with the bequest.
Congratulations if you already have an estate plan in place. (You are doing better than 70% of Americans who do not have one.) However, very few estate plans are ever "once and done" after a few years have passed. You should at a minimum have a qualified estate planning attorney sit down with you and review your estate plan and how it fits with your intents and current law.
Our office offers a free half-hour estate strategy session. Your plan may be fine for your current wishes or there may be some parts of it that are worthwhile to update. Call us toll-free at 952-641-7312 for a free, confidential evaluation.