Estate Planning

Protecting Your Family’s Future – The Importance of Updating Your Estate Plan

Posted on by Jean Mahserjian
Estate planning is an essential task that many put off, but it plays a critical role in protecting your family’s future. A well-thought-out estate plan can ensure that your wishes are carried out and your loved ones are provided for after you are gone. However, just creating an estate plan isn’t enough. You need to update it regularly to reflect changes in your life. As life circumstances evolve, so should your estate plan. From new family members to financial windfalls or changes in laws, regularly reviewing your estate plan ensures it is current, comprehensive, and truly reflective of your needs.

Why You Need to Update Your Estate Plan Regularly Protecting Your Family’s Future - The Importance of Updating Your Estate Plan

Updating your estate plan might not be something you think about often, but it’s crucial to revisit it every few years or after significant life events. Life doesn’t stand still, and neither should your estate planning. In fact, without proper updates, your estate plan could be invalid, incomplete, or outdated, leaving your family vulnerable to complications after your passing. Here are several reasons why you should prioritize updating your estate plan.

Changes in Family Dynamics

One of the most common reasons to update an estate plan is a change in family dynamics. Major milestones like marriage, divorce, the birth of a child or grandchild, or even the death of a loved one should prompt you to revisit your estate plan. These life changes can drastically shift the way your assets should be divided, who will care for your children, or how you want your healthcare decisions to be made. For example, you might want to add a new beneficiary to your will, designate a guardian for a newborn, or remove an ex-spouse from your power of attorney. Updating these critical documents will ensure they reflect the current structure of your family and prevent any unexpected outcomes.

Financial Changes and Acquisitions

Your financial situation is likely to change over time. Whether you’re buying property, inheriting wealth, selling a business, or experiencing a decrease in income, these changes affect your estate plan. Without an update, your estate plan might not reflect the true value of your assets, or it might leave your heirs with a higher tax burden than necessary. If your estate grows significantly, you might want to consider setting up a trust to protect your wealth and reduce estate taxes. An estate plan should be reviewed regularly to accommodate any shifts in your financial status.
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Changes in Health and Incapacity Planning

Another crucial reason to update your estate plan is your health. As you age or if you experience a medical condition, you’ll need to reassess how your healthcare decisions will be made. This includes reviewing your living will and healthcare proxy. These documents grant someone you trust the authority to make healthcare decisions on your behalf if you become incapacitated. If your health changes, or if someone you trusted is no longer able to fulfill this role, you’ll want to update these important directives to ensure they reflect your current wishes.

Changes in Laws and Tax Regulations

Estate planning laws and tax regulations are subject to change, and it’s vital to stay informed about these shifts. For example, there may be changes in estate tax exemptions, new deductions, or updates to laws surrounding trusts and wills. These changes can affect the way your estate is taxed and the way your assets are distributed. Updating your estate plan ensures that it remains in compliance with current laws and that your beneficiaries benefit from any new tax savings opportunities.

Key Components to Review When Updating Your Estate Plan

When it comes time to update your estate plan, it’s essential to review all key components of your documents. Here’s a breakdown of the main components that should be reviewed and updated regularly.

Will and Trust

Your will or trust is the cornerstone of your estate plan. It dictates how your assets will be distributed after you pass away and who will be responsible for executing your wishes. As your life changes, so should your will and trust. A significant life change like the birth of a child or the sale of property might require you to update your will or establish a trust to manage your assets. Make sure that your will reflects the current state of your estate and that the people named in your will are still the ones you want to oversee your affairs.

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Power of Attorney and Health Care Proxy

A power of attorney gives someone the authority to make financial decisions on your behalf if you become incapacitated. Similarly, a healthcare proxy designates someone to make medical decisions for you if you are unable to make them yourself. These documents are essential for ensuring that your wishes are followed, and they should be updated if your relationships or health circumstances change. For example, if you no longer trust someone to handle your financial matters or if you want to appoint a different person to make decisions about your healthcare, it’s crucial to update these documents.

Beneficiary Designations

Many assets, such as life insurance policies, retirement accounts, and bank accounts, allow you to designate beneficiaries outside of your will or trust. These designations are crucial because they supersede the instructions in your will. As life circumstances change, so too should these beneficiary designations. Review all beneficiary designations on your life insurance, retirement accounts, and other assets to ensure they reflect your wishes. This is especially important after major life changes like marriage, divorce, or the birth of children.

Guardianship Designations

If you have young children, appointing a guardian is one of the most important aspects of your estate plan. If something were to happen to you and your spouse, a guardian would be responsible for raising your children. It’s important to review this designation regularly to ensure that the person you’ve chosen is still the right fit and that they’re willing to take on the responsibility. If your circumstances or family dynamics change, you may need to revise the guardian designation to ensure your children are cared for according to your wishes.

How Often Should You Update Your Estate Plan?

It’s recommended to review your estate plan at least every three to five years, but significant life events should prompt immediate updates. If you experience a major life change, such as a marriage, divorce, birth, death, or a significant change in assets or health, you should revisit your estate plan to ensure it remains current and reflective of your wishes. Additionally, any significant changes to tax laws or estate planning regulations may warrant an update. Updating your estate plan is one of the most important things you can do to protect your family’s future. It ensures that your wishes are honored, your loved ones are provided for, and that your estate is handled in the most efficient and effective manner possible. Life is full of changes, and your estate plan should evolve to keep up with those changes. If you haven’t reviewed or updated your estate plan recently, now is the time to do so. If you need help updating or creating your estate plan, contact Mahserjian & Mahserjian-Ortiz, PLLC today. Our experienced attorneys specialize in estate planning and can guide you through the process of creating a plan that protects your family’s future and gives you peace of mind.

To learn more about this subject click here: Why Every New Yorker Needs an Estate Plan

Jean Mahserjian