Having an estate plan is crucial for anyone with assets to pass along after their death. However, creating the plan is just the first step.
After that, it is equally important to keep the plan up to date. But how does a person know when to update their plan?
Facing big life changes
Forbes discusses the times when a person should consider updating their estate plan. One of the major indicators is if a big life change has happened recently.
This typically includes things like changes to finances, beneficiaries or location. Regarding location, each state has its own laws that govern estate planning, so someone moving from one state to another should double-check to ensure their estate plan still counts as valid under the new state laws.
Regarding beneficiaries, this applies to anyone set to benefit from an estate plan. Changes to beneficiaries can include an addition or loss through means such as birth, death, divorce, marriage, adoption and more.
Regarding finances, any change in finance should get reported, whether positive or negative. This can include declaring bankruptcy, inheriting an estate, selling or buying property and more.
Time elapsed since the last update
Additionally, a person should consider reviewing and potentially updating their estate plan once every three to five years even if no significant changes happen.
This simply serves as a way to let a person refresh their memory and ensure that everything in their estate plan still holds true. It also gives them a chance to make those changes if anything has happened.