How Often Should I Update My Estate Plan?

Each year, the assisted living referral company, Caring.com, performs an annual “health check” on the different aspects of estate planning among Americans. Their 2023 Wills and Estate Planning Study shows that while 64% of our country’s residents view having a will as important, especially in light of inflation during recent years, only 34% of the population actually has an estate plan. If you’re one of the few who is ahead of the curve in that you already have a will or other estate planning documents in place, it’s important that you don’t treat it like one of those “fix it and forget it” types of things. You do need to revisit it regularly, but how often? Below, we’ll address the question, “How often should I update my estate plan?’.

Major Life Events That Should Motivate You To Consider Reviewing Your Estate Plan

From marriage to divorce, having a baby, an out-of-state move, and a spouse’s death. These are just some examples of the life events that call for a reassessment of your estate plan. Why? Let’s take each of those monumental situations described above and break down why you would potentially want to revisit your estate plan if they occurred:

Getting Married or Divorced

It’s commonplace for newly married spouses to want to list each other as the ones who will inherit the majority or the entirety of their estate when they pass away or perhaps as the beneficiary of their trust. Additionally, a husband or wife might list their spouse as their health care proxy, Health Insurance Portability and Accountability Act (HIPAA) releases, financial power of attorney or, at the very least, an authorized user on their financial or investment accounts, life insurance beneficiary, designated guardian of their minor children, and more. 

Should the feelings between the two of you dissipate, your desire to have your now ex-spouse inherit your property, receive insurance proceeds, raise your kids, or have control over your health or finances isn’t likely the same as it once was. Taking time to re-evaluate your estate plan will give you an opportunity to remove your ex’s name and replace it with someone else’s on these estate planning documents.

Welcoming a Child or Children

Whether you introduce a new biological or adopted child into your family, you’ll want to at least review and update your will. If it’s your first child, then you’ll want to perhaps add a guardianship clause listing who you’d want to raise your child if you became incapacitated or died and were unable to do so yourself. You’ll want to update this with your additional children’s names each time you add a new one to the mix. 

Also, if you haven’t set up a trust before, this might be prime time to fund your first one. You can set aside money or assets in this trust that could go to helping care for your child if you weren’t able to do so yourself. 

Relocating to Another State

North Carolina General Statutes Chapter 31 outlines what constitutes a valid will in our State. Generally, the testator must be at least 18 or a married minor and sign the legal document. In addition, although oral wills can be proven, it is best that the will be in writing on paper, and signed by the testator and at least 2 witnesses.  It is a self-proving will if the testators sign the will in front of a notary public, who then signs the verification as to the execution of the document.  Other states have different definitions of what qualifies as a valid will from North Carolina. 

Also, there may be other legal documents that should be drafted a certain way in one state versus another. An important example is a Medical Power of Attorney.  The acceptable form of the document may differ from state to state.  Additionally, while some trust types may exist in some states, they might not in others. These are just a few examples of why one of the first things you should do when relocating to a new state is revisit your estate plan to ensure it aligns with all applicable laws in your new area.

Someone Close to You Dies

You’ll want to revisit your estate plan at this point for much the same reasons as when you get married or divorced. You’ll want to list someone else other than the decedent as the beneficiary, heir, or power of attorney on any documents you might have. This same logic applies to situations where the personal representative you included in your will or the trustee charged with administering your trust passes away.

Additionally, if you haven’t done so already, the death of a husband or wife might be the right time to consider executing a transfer on death deed, which would allow someone else, like your children, to seamlessly inherit your home, avoiding the probate process. Alternatively, you can consider funding a revocable living trust to accomplish a similar outcome.

You Are Diagnosed With a Terminal Disease

One other prime time to reassess your estate plan is when you’re looking at a dismal health prognosis straight in the eye. While you’ll certainly want to revisit all of your estate planning documents in light of these circumstances, one that you may want to pay particularly close attention to is your health care directive, also known as a ”Living Will”, as if you’re on death’s door after having already fought a long fight, you might want to clarify that you don’t want doctors to attempt any further life-saving measures, for example.

A Family Fallout Occurs

Things can happen that lead to a breakdown of the once united familial unit, leading to you no longer wanting to leave your hard-earned assets or much-cherished family heirlooms to who you once intended to. Should this be the situation you find yourself in, you’ll want to go ahead and update your will and other estate planning documents to ensure they best reflect your most current preferences. 

Your Financial Circumstances Significantly Change

Most of us won’t strike it big by playing the lottery during our lifetime, but we might inherit a sizable amount of money, a home, or other valuable assets from a loved one we meant a lot to. You might work hard and end up saving significant funds as well. No matter how you come into valuable assets, including cash, any big-ticket acquisitions you make should prompt you to revisit your plan to ensure it gets passed on as you’d like it to.

Other Situations That May Warrant Revisiting Your Estate Plan

Some other situations aside from the ones listed above to account for when deciding whether to update your estate plan include: 

• Tax laws change: Tax codes are always being updated, and when they are, it might affect whether it’s beneficial to have certain types of trusts and the best strategies for transferring property after your death. Additionally, changes in the law could impact how much and whether inheritance, estate, or gift taxes are due (none of these currently exist in North Carolina on a state level, but they do on a federal one). 
• Judges enter in critical opinions on estate-related matters: While it doesn’t happen every day, judges issue opinions that can shape how other Courts interpret laws and render decisions. If they’re related to inheritance or estate planning in any way, this could impact the outcome of your own case. 

Is Time To Update Your Estate Plan?

A good rule of thumb, even if none of the circumstances listed above have changed in your life and you don’t believe there have been any changes in law or court rulings that may impact you, is to review your estate plan at least once per year.  It can be helpful to have the trained eye of a lawyer assisting you as you do this. Our legal team at Schulz Stephenson Law would be more than happy to discuss when you initially created your estate plan and what has happened in your life since then and advise you whether it is an appropriate time to revise any of your estate planning documents.  Call or email for a consultation with a legal representative in Beaufort, NC, now.