HOW OFTEN DO I NEED TO UPDATE MY ESTATE PLAN?
There is no hard-and-fast rule as to when you should update your estate plan.
But if you and/or your spouse have had significant lifestyle changes since your last estate planning documents were executed, you should seriously consider updating your current documents.
Here are some situations that trigger the need to update your estate plan:
- Death of a named beneficiary, trustee, executor, agent or guardian
- Changes to your health or disability
- Changes to your employment status
- The people you selected as trustees, executors, agents or guardians cannot, or should not, serve in those roles anymore due to changes in health, location, etc.
- Acquisition or loss of property, including buying or selling a house, car, etc.
- Minor children are now adults
- Addition of children or grandchildren to the family
- Changes to life insurance policies
- Pension changes
- Social Security benefits changes
- Moving to a different state, which may impact applicable estate and tax laws
- Addition of digital assets, such as online financial and social accounts.
Failing to update estate plan documents may result in your property not being passed on as you’d prefer, or even worse, lead to costly legal fighting among your loved ones as they work to sort out questions and ambiguities.
A will is a legal document that specifies how a person’s assets will be distributed after their death. It can also include instructions for the care of minor children and pets. A will is typically created and executed while the person is still alive and can be changed or revoked at any time.
A trust, on the other hand, is a legal arrangement where a trustee holds and manages assets for the benefit of one or more beneficiaries. The assets in a trust are not owned by the person creating the trust (the grantor), but are instead managed by the trustee for the benefit of the beneficiaries. A trust can be used for a variety of purposes, such as managing assets for a minor child, avoiding probate, or reducing taxes.
Both wills and trusts can be used to plan for the distribution of assets after death, but they serve different purposes and have different advantages and disadvantages.
Wills are relatively simple to create and are generally less expensive than trusts, but they can be subject to probate, which can be a time-consuming and costly process. Additionally, wills become public record when they are submitted for probate, which means that the details of the will are available for anyone to see.
Trusts, on the other hand, can be more complex to create and may require the services of an attorney, but they can provide more privacy and can be used to avoid probate. Trusts can also be more flexible than wills in terms of how assets are distributed and can be used to manage assets for beneficiaries who are unable to do so themselves.
Overall, both wills and trusts can be useful tools for estate planning. The best option will depend on your individual circumstances and goals. It is important to consult with an attorney or financial advisor to help you determine which option is right for you.