Gregory S. DuPont, JD, CFP March 10, 2023

Has it been a while since you last reviewed your estate plan? Or maybe you just haven’t had time to create one yet? Whether you are newly retired or preparing to retire, having an estate plan in place is essential. With that being said, understanding when to update and review your plan is critical too. In this blog post, we'll discuss why now might be the perfect time to revisit and renew your long-term plans – so read on! Here are 3 reasons why you may need to update your estate plan:

  • Changes in family dynamics

  • Major changes in assets or income

  • Tax law changes

We'll talk about each one in detail below. Even if none of these events occur, you should still review your estate plan with an attorney at least once every five years.

Changes in Family Dynamics

If your family structure has changed, it's important to make sure your estate plan reflects these changes. This could include adding or removing beneficiaries, updating executors and trustees, or revising powers of attorney.

You may want to update your estate plan when there is a birth in the family. Many clients come to us when grandchildren are born and want to update their trust to provide for their grandkids as well. Our estate planning attorneys in Dublin, Ohio can help you decide which type of trust best fits your wealth transfer goals. They can also instruct you on how to properly fund the trust. If you're concerned about your wealth lasting for future generations, lifetime giving can also be an effective solution. Although it may sound counterintuitive to give money to an individual who may not be financially savvy, a lifetime gift can allow you to counsel and guide the recipient on how to best use the money. Many people use lifetime giving as a way to teach valuable lessons that promote long-lasting, multigenerational legacy planning.

You'll also want to update your estate plan when there is a death in the family, especially if that person plays an important role in your estate. You'll want to choose backup executors, successor trustees, etc. in case your first choice is unable to serve in that role. Similarly, you may also want to update your estate plan when there are significant changes in the health of family members. For example, a beneficiary is diagnosed with a debilitating illness and you want to leave more funds to them when you pass away.

Many people also update their estate plans when marriages and divorces happen in the family. For example, you may want to provide for your child's spouse, or the opposite of that, make sure the spouse doesn't have access to the funds you leave your child. Things can get complicated for blended families when a spouse has children from a previous marriage. Make sure you speak to an experienced estate planning attorney about your desires and options.

You'll also want to update your estate plan as your children (and grandchildren) age. For example, you may have a trust that houses money for the benefit of a minor. As that child becomes an adult and learns to be responsible with money, you may want to alter the terms of the trust.

> Our client Betsy came to us to update her plan as her children got older. Check out her story here.

Lastly, family conflict may also cause you to want to change your estate plan. If you anticipate that family members may fight over your assets after you pass away, it's important to think about what you can do to prevent this from happening. A trusted estate planning attorney can help you make your wishes clear.

Major Changes in Assets or Income

If your assets or income have significantly increased or decreased, it's important to review your estate plan and make sure it still reflects your goals. If you've had a large increase in income, you may want to update your will and trust documents to account for that change. Similarly, if you've recently acquired new assets, such as real estate, stocks, a large inheritance, or a new business, you'll want to make sure those are properly addressed in your estate plan.

If your estate increases by a significant amount, you may in jeopardy of owing estate tax when you pass away. For 2023, the estate tax exemption amount is $12.92 million. If a person dies with a net worth less than the exemption, no estate tax will be owed. If a person dies with a net worth exceeding the exemption, the amount exceeding the exemption will be subject to a 40% estate tax. There are legal tools you can use to reduce the value of your estate for taxes purposes and make sure this doesn't happen.

If a major change in assets or income has occurred, it's best to consult with an experienced estate planning attorney to make sure everything is taken care of correctly.

Tax Law Changes

Changes in federal and state tax law can also have a significant impact on your estate plan. It's important to stay up to date on these changes, as they can affect the status of existing trusts and wills. Tax laws are always changing, so make sure you review them regularly with your attorney or financial advisor. This is especially important when there is a change in administration as different political parties often have different opinions on tax laws.

When Should You Completely Redo Your Estate Plan

Sometimes, it's necessary to completely rewrite your estate plan. This is typically done if there have been multiple major changes in your assets or family structure, or if the previous estate plan was poorly written or outdated.

Imagine a recipe card you have used for years. If you've crossed out and changed one or two ingredients, the card may still be readable. However, if you've altered the ingredients many times, and changed the measurements of everything, the recipe is probably confusing. If your loved ones cannot clearly read your instructions, your recipe won't work.

The same can be said about a will or revocable living trust. Making one or two changes to a document is generally acceptable, but when revisions are numerous or extensive, your instructions become confusing. The primary reason for the confusion is that the old document and any new documents must be read together to understand the full instructions. When you start to make too many revisions, the documents may not reflect each other well. For this reason, starting over with a new will or a complete restatement may serve you better.

How to Update Your Estate Plan

There are different processes for updating wills, trusts, and powers of attorney.

If you have a will, you can make small changes or updates with a codicil. A codicil is simply an amendment to a will that must be created, signed, and witnessed in the same manner as the will itself. You also have the option to create a new will with new instructions.

Trust updates are a bit more complicated. You can make updates to a revocable living trust by way of an amendment or a complete restatement of the trust agreement. An amendment updates a specific part of the trust whereas a restatement creates a new set of operating instructions for the entire trust. Your trust document will indicate the process for making changes. Most revocable living trusts allow you to make simple changes such as updating beneficiaries or adding assets without having to rewrite the entire document.

If you have an existing Power or Attorney form and you need to make changes, you'll likely need to revoke your current document first. Then, you'll create a new Power of Attorney that includes the updates you want to make.

Hire an Experienced Estate Lawyer to Update Your Estate Plan

Your estate plan needs to be reviewed and updated regularly to make sure it still reflects your current desires, goals, and financial situation. There are many reasons why you might want to update your estate plan, including major life events, changes in your financial circumstances, and law changes.

Making changes to an estate plan isn't something you should do on your own. There are many legal nuances you may be unaware of. Instead, it's important to work with an experienced estate planning attorney who can help make sure all of the necessary paperwork is completed accurately and that your wishes are followed. Don't delay—call our Dublin, Ohio office at 614-389-9711 to schedule an appointment today.

Want to learn more about what goes into a sound estate plan? Download our Consumer's Guide to Estate Planning in Ohio here.