10 Triggers for an Estate Plan Update
We don’t always connect the dots between a change in life circumstances and the need to update our Estate plan.
Major life milestones such as marriage, divorce, birth of a child, or death of a spouse, are easy to recognize, but they too often slip through the cracks. Other events that occur throughout our lifetimes are easy to miss entirely. Here are 10 triggers that could call for a fine-tuning of your plan and/or a consultation with your attorney.
1. Major family events: marriage, divorce, birth or adoption of a child, grandchild
Clearly these events have an impact on your Estate - and many plans are drafted to anticipate them. However you should always make sure that you and your attorney review the plan and update as necessary to keep up with changing family circumstances.
2. Relocation out of state
Moving to a different state or country can trigger the need to update your estate plan. Each jurisdiction has its own laws and regulations concerning estate planning, taxes, and inheritance. Your plan will need to comply with the laws of your new residence to avoid potential legal issues and settlement delays.
For those with international ties, such as property ownership or dual citizenship, the complexities of cross-border estate planning require meticulous attention. Updating your estate plan in accordance with relevant international laws and treaties will prevent legal challenges and unnecessary tax burdens.
3. Tax and Estate law changes
Any time there is a proposed Tax or Estate law change, you should consult with the relevant advisor on your team about how it may apply to you. This can include meaningful changes like the federal lifetime Estate and gift tax threshold, set to revert back to nearly double the current exemption in 2026. It can also include lesser known changes, such as Power of Attorney legal updates in New York, or California’s periodic increases in estate value calculations to qualify for the ‘Small Estate’ probate shortcut. Your team of advisors should help you keep on top of this - but you should also be aware of the need to proactively review the state of your plan.
4. Change in circumstance of anyone named in your plan
It can be cumbersome to track the status of everyone in your Estate plan, and recognize that a change in circumstance has put the plan out of alignment. Did your appointed guardian move out of state? You may want to include a provision to ensure interim care for your children while waiting for the guardian to arrive. Did your appointed Executor or a beneficiary predecease you? Although many plans have built in provisions for commonly expected milestones, a meaningful change for any of your Estate stakeholders should serve as a trigger to confirm.
5. Beneficiary attainment of legal age
When a minor beneficiary attains the legal age of adulthood, you may need to update your estate plan to reflect their new status, remove guardianship, etc. You may also want to reassess the distribution of the inheritance, such as determining whether a trust would be preferable until they reach an age when they can handle it responsibly. And at some point, you may decide to transfer power of attorney, health care proxy, and/or executorship of your Estate to your adult children.
6. Acquisition or sale of a meaningful asset
If you add a substantial asset to your Estate portfolio (like real estate, personal property, a financial account), and want it included in your Trust, you must ensure that it is appropriately titled. One of the biggest challenges in Estate settlement is determining which assets are covered by the Trust. Finding assets that aren’t covered because the Estate holder neglected to appropriately title them is an all too common occurrence.
A significant liquidity event such as the sale of a rental property or family business may also have an implication on your Estate.
7. You start a new business
A new business means new assets, including physical, intellectual and financial interests. You’ll likely want to include this new business succession plan in your Estate, including designating individuals that will take over management of the business when you retire, become incapacitated, or pass away.
8. Material income change, inheritance or large gift
If you find yourself the beneficiary of a sudden windfall, you will want to account for your new assets in your Estate, while minimizing tax exposure. This may include creating a gifting strategy, or adding a charity as one of your beneficiaries.
9. Health issues or approaching advanced age
It’s better to prepare for health or age-related challenges preemptively - before you are in a situation where you can’t make the calls yourself. However if you haven’t, and you or your spouse have an impending health issue, it’s time to make sure your Estate plan is tuned to accommodate it. Verify the person you have appointed to make medical and financial decisions on your behalf, and make sure your Power of Attorney and Advanced Healthcare Directive documents still reflect your wishes. Confirm your long term care needs and make sure they are appropriately reflected in your plan.
10. Time has passed
You should revisit your Estate plan periodically for a general check in - best practices call for every 3-5 years. Legacy Logix customers stay ahead of this curve, with annual reviews conducted automatically as part of their service.
