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How often do estate plans need to be updated?

On Behalf of | Apr 8, 2024 | Will |

Estate planning is a so-called “living process,” as estate planning documentation benefits from periodic review and updates to better ensure that it remains aligned with your life circumstances, financial situation and goals. 

As a general guideline, reviewing your estate plan every three to five years is a prudent practice. However, certain life events can necessitate more immediate modifications. Understanding when and why to update your estate plan can help you to protect your assets and better ensure that your wishes are carried out effectively.

Catalysts for urgent updates

Significant changes in your personal life are often indicators that your estate plan may need revisiting before your “regular” review period occurs. These can include marriage, the death of a spouse or beneficiary, the birth of a beloved child or divorce. Such events can dramatically alter your relationship dynamics and financial obligations, necessitating adjustments to your will, trusts and beneficiary designations.

A substantial shift in your financial landscape is another pressing reason to update your estate plan. This includes receiving a large inheritance, experiencing a significant increase or decrease in the value of your assets or starting a new business. Updating your plan can help to ensure that your asset distribution wishes are accurate and that your estate is structured efficiently for tax purposes.

Finally, moving to a different state can affect your estate plan due to variations in state laws governing wills, trusts and estate taxes. Similarly, tax laws and regulations affecting estates and trusts can change – even at the federal level – and potentially impact your estate planning strategies as a result. Staying informed about relevant legal changes can help you make necessary adjustments to optimize tax benefits and better ensure legal compliance.

At the end of the day, while a periodic review every three to five years is advisable, some shifts in circumstance can necessitate more frequent updates.