If you already have an estate plan know that you are ahead of the game. The vast majority of Americans do not have an estate plan in place — this is in spite of the fact that we just lived through a pandemic that had us all questioning what the future would look like. For some, this sparked a need to put an estate plan in place. For others, it led to conversations but has not yet resulted in follow through.
Whether triggered by the pandemic or not, well done to those who have an estate plan put together.
Now for the next step: knowing when to review and update your plan. There are a few big life events that should trigger a review. These include:
- Addition of family members. Births, adoptions, and marriages are happy reasons to have another look at your estate plan. You may want to accommodate for new family members in your plan. This provides an opportunity to add beneficiaries and adjust as needed.
- Subtraction of family members. Unfortunately, not every reason for review is a happy one. The death of a loved one or divorce should also lead to a review. Without a review and update, assets may go to unintended beneficiaries.
- Change in life goals. Maybe we sold a business or have transitioned into retirement. Whatever life event has shifted our goals for the future should also shift our view back towards our estate plan. We may want to adjust documents or use legal tools to help better fund our new plans.
These legal tools can include the use of a trust. A trust can do more than just shift assets to future generations, it can also help shelter assets and provide valuable tax savings. It is important to use these tools wisely. These are useful legal tools but unscrupulous parties may try to use these tools to illegally thwart their tax obligations.
These are just a few of the many reasons to review an estate plan. If nothing else, a good rule of thumb is to review the plan once every three to five years. If it does not meet your needs, it is wise to seek legal counsel to help make sure the plan is adjusted wisely.