5 Reasons To Update Your Estate Plan


You probably don’t need to be told that sometimes, “life happens.” But it’s true, and often times our reminders of this aren't as benign as this blog post. We just don’t know what tomorrow will bring, and none of us are even promised that tomorrow will come. Because of this, we ask our clients to be brave enough to face their own mortality and be wise enough to do something about it. Those that have already set up an estate plan are on the right track, but it’s just as important to keep your estate plan up to date.

Here are some reasons to update your estate plan:

1. Additions to the family. New children or grandchildren are reasons to revisit what your plan says. Do you want them included? If so, act now to ensure they are not unintentionally disinherited.

2. The sale or purchase of a major asset. Have you allowed for this in your plan? If you have a Living Trust, did you get this asset titled in the trust? Many make the mistake of not titling assets correctly.

3. Someone passes away. It's morbid and the hardest thing to think about, but have you accounted for what could happen if your inheritors died before you? What happens to their share?

4. Laws change. This happens without most people even realizing it. Does your estate plan reflect the latest rule changes? Your old estate plan could end up causing a mess because you never updated it to reflect new rules. It’s wise to review your plan at least every 2-3 years.

5. You have a fairly large retirement account. This is the big one and there's a problem with estate plans that we see all too often. Some estate planners never address the problem of the income taxation of a traditional retirement account like an IRA, 401k, 403b, 457, etc.

The money in these accounts have never been taxed! You’ve worked hard to accumulate it, so you'd better know the rules that apply to it when you begin to take it out. What happens when your kids inherit it? Will they have to pay an enormous tax bill? There are options that may help your inheritors avoid the “ticking tax time bomb,” as we call it.

Each person’s situation can be somewhat unique and there are other issues that may need to be carefully considered. Be smart and seek out a qualified professional to consult with about creating or updating your existing estate plan. Your loved ones will someday be glad you did.