When I prepare a client’s estate planning documents, whether it’s a simple Will or a revocable trust, I am frequently asked how often the documents should be reviewed. While the answer is subjective, I believe that there are some guidelines that may be helpful to you when asking this question.
If any one or more of the following applies to you since your estate planning documents were prepared, you may want to review them for potential changes:
- MARRIAGE OR DIVORCE. If you have recently gotten married, this is a time to change your documents to include your spouse, or to prepare documents as a married couple. If you have a single person trust, you can continue to use this trust for any assets that you wish to maintain as separate property. If you have recently gotten divorced, you should change all documents to remove your ex-spouse as a beneficiary of your estate and to re-title assets in the name of your new trust.
- BIRTH OR DEATH OF A CHILD. The birth of a child is a time to include the newborn and to make long-term plans for the distribution of your estate as the child grows. The death of a child may or may not be a cause to make changes to your documents, but it is certainly a time to review them to ensure that at least one alternate beneficiary has been named.
- LONG-TERM RELATIONSHIP. If you are now in a long-term relationship, but not married and want to provide for your significant other, then your documents will need to be changed. This may include the distribution of your estate as well as who is named as power of attorney for healthcare and financial decisions. Also, the purchase of a home with a significant other is an important time to review the title and ensure who will inherit the property upon your death.
- INHERITANCE OR SUBSTANTIAL INCREASE IN NET WORTH. If you have inherited money or assets such as real property or stock, your documents should always be reviewed, as they were prepared according to your net worth at the time the documents were signed. While this does not mean that they will “have to” be revised, it does mean that they “may” need to be revised. How title is taken is very important, as all inheritance is separate property, until or unless it is co-mingled with community property. Most trusts allow for a married couple to hold separate property within that trust, but again, it depends on how title is taken when the asset is transferred. There may also be a need for real property to be in a new, separate entity such as an LLC. This would depend on the value and type of property you have, as well as if it is leased to an outside party or used as a primary residence.
- IT’S BEEN AT LEAST 3 YEARS SINCE YOU LOOKED AT YOUR DOCUMENTS. Even if you have not had any major changes in your life since you prepared your estate planning documents, you should always confirm that the documents do what you want them to do. Since times change and memories fade, it’s always important to make sure that what you “think” you have in place “IS” in fact, what you have in place.
If you have estate planning in place, you have prepared your plan for several reasons. One of which is to ensure that your loved ones will be taken care of after your passing. It is also to simplify the distribution and avoid the expense and process of probate. In light of the above, you might want to do yourself and your loved ones a favor and take some time to review your documents.