Feeling Smug Because You Have an Estate Plan?

Certified Elder Law Attorney Lisa Hostetler Brown knows that many people assume that estate planning is a once-and-done proposition. As the founder of LawyerLisa, a Life Care Planning Law Firm based in Lexington, South Carolina, Lisa sees people every day who are resting on their estate planning laurels. “These people find out the hard way that the documents they created at age 40 don’t necessarily work when you’re 70,” she said.

When should you have your estate plan updated? Lisa advises making an appointment with your local estate planning attorney (or Life Care Planning Law Firm) when any of the following things happen:

It has been three or more years since your last update.

Things change. So do state and federal laws, including tax law or other laws that might have an impact on your estate, such as Powers of Attorney and Advance Directives.

You are getting older.

It is vital to update your estate plan at or around retirement age—before illness or disability strike. “When you’re facing a long-term care crisis, the Power of Attorney you had crafted decades ago probably doesn’t give your agent the right powers today,” explained Lisa, who works with many adult children trying to protect assets for parents needing nursing home care. “The solution is to move those funds into a trust, but I can’t do that without the trust provision in the Power of Attorney. South Carolina requires that provision, as do many other states.”

You relocate to another state.

Each state has its own laws, and some of the differences are significant.  For example, some states still have inheritance or estate taxes, while most don’t. “State laws regarding Powers of Attorney, Advance Directives, and other estate planning documents can vary widely,” advised Lisa. “If your move takes you across state lines, it’s time to update your estate plan.” 

You buy a second home in another state.

Work with your estate planning attorney to determine where your principal residence will be. You also might want to create Powers of Attorney and Advance Directives that are valid in the new state in case you become disabled there.

Someone leaves (or joins) the family.

If you have recently married, remarried, divorced, or become widowed, or if a new child or grandchild is born or adopted into the family, it’s time to update your estate plan.

Your net worth goes up (or down).

A significant change in the value of your estate since the plan was drafted should always trigger a trip to your estate planning attorney.

The composition of your estate changes.

Acquiring or selling a significant asset, such as real estate or a business, means that a reassessment of your estate plan is in order.

Your beneficiary designations are out of date.

Forgetting to update the beneficiary designations of IRAs, 401(k)s, and other retirement plans is a common oversight. The beneficiary of these accounts is determined by the beneficiary designation form on file with the plan, not your will or trust. “This happens all the time,” Lisa said. “Don’t let your exes get a windfall. Update those beneficiary designations!”

You’re reconsidering your choice for executors and trustees.

Are the people you chose for these critical fiduciary roles still able and willing to perform these jobs as you’d like them done? Could another person now be a better choice? Has anyone died, moved away, or opted out?

Lisa admits that estate planning updates often get pushed to the bottom of the to-do list. “Delays can lead to disaster,” she added. “You can be fine one moment, and incapacitated (or worse) the next. If you wait too long to update your estate plan, your family and heirs will be left to clean up the mess. Don’t wait. Do it now.”