When was the last time you revisited your estate planning? Chances are, it was when you signed a stack of documents at your attorney’s office. Many individuals create an estate plan and then forget about it for years, which is a common mistake. It is crucial to review your plan periodically due to changes in laws and significant life events such as marriage, birth, divorce, or the death of a family member. Updating your estate plan every 3 to 5 years is recommended to ensure compliance with current laws and regulations.
The Importance of Choosing the Right Fiduciary
An executor or fiduciary is responsible for managing someone else’s estate. It is essential to appoint the right individuals to represent your estate during the probate process. Executors are typically named in a will and are tasked with overseeing the estate’s administration, including collecting assets, paying debts, expenses, and filing tax returns. On the other hand, a trustee manages assets held in trusts, ensuring distributions to beneficiaries according to the trust agreement.
Overlooking the Growth of Your Children in Estate Planning
Parents often designate guardians for their children when they are young. However, as children grow into adults, the need for a guardian may no longer be necessary. Failure to update your estate plan to reflect changes in your children’s lives, such as marriage or having their own children, can lead to complications. Trusts created for minors may no longer be applicable once they reach adulthood, highlighting the importance of revisiting and updating estate plans regularly.
Neglecting Recent Wealth Accumulation in Estate Planning
As individuals accumulate wealth, their financial situation becomes more complex. An increase in assets can impact annual taxes and future estate taxes. Failure to update an estate plan to include recent wealth accumulation can render the plan ineffective. It is crucial to review and adjust your estate plan to reflect current financial circumstances and ensure that your assets are distributed according to your wishes.
Conclusion: Regular Updates Are Key to a Successful Estate Plan
Estate planning is not a one-time task but requires regular review and updates to account for changes in laws, family dynamics, and financial circumstances. By revisiting your estate plan every few years, you can avoid complications during the probate process and ensure that your assets are distributed according to your wishes. Remember that unexpected events can occur, so it is essential to be prepared and seek guidance from a probate lawyer if needed.
