How Often Should I Update My Estate-Planning Documents?

Roger Wohlner

There is no single right answer to this question. According to Boston-based attorney Danielle Van Ess, the general rule for reviewing one’s estate-planning documents is every three years. But she adds that, as with anything else, the right time for a review depends on your individual circumstances. Has your situation changed in any of the following ways?
  • Have you gotten married?
  • Have you gone through a divorce?
  • Has your spouse died?
  • Have you given birth to or adopted a child?

Virginia attorney Scott Zucker says that the following situations might also require a review of your estate plan:

  • Relocation to a different state
  • Death of a beneficiary
  • Incapacity of a family member
  • Death or incapacity of a named guardian for minor children
  • Change in intentions

In general, changes in the laws governing estate planning and inheritances should prompt a review of your estate plan.

What Should My Estate Plan Include?

Estate planning conjures up images of the wealthy trying to avoid taxation of large estates. In reality, estate planning is about ensuring that your assets pass on to your heirs in a manner consistent with your desires.

Key elements of your estate plan include:

  • A will
  • Trusts
  • Insurance
  • Proper beneficiary designations

Many mistakes are made with beneficiary designations. This is the principal way that insurance policies, company retirement plans, and IRAs are passed on to your heirs. In fact, these beneficiary designations are often called will substitutes, because it is the beneficiary designation that determines how these assets are passed on to your heirs, regardless of what may be specified in your will or other estate-planning documents.

Common beneficiary mistakes include:

  • Failing to change a beneficiary designation from an ex-spouse to a current spouse. As you might imagine, leaving a $1 million life insurance policy to your ex-spouse upon your death will not leave your current spouse with fond memories of you.
  • Failing to designate proper beneficiaries for an IRA. This can make dealing with the loss of a loved one a real nightmare if handled improperly.

How often should you update your will and estate-planning documents? Perhaps the real question is what should prompt a review.

As a financial adviser, I stay on top of my clients’ personal and business situations so that I am aware of changes that might require a review and possible adjustment. Further, I try to think in terms of how changes in the laws might affect my clients’ intentions.

Your estate plan is not something that should be done once and put in a drawer. Make sure you review it at least every few years and anytime your life changes.

Roger Wohlner, CFP®, is a fee-only financial advisor at Asset Strategy Consultants in Arlington Heights, Illinois. Roger provides advice to individual clients, retirement plan sponsors and participants, foundations, and endowments.

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