Just as your vehicle requires upkeep to maintain its performance and reliability, your estate plan needs reviewing – at least every 3-5 years – to stay relevant. And whether it’s the many moving parts of your vehicle or estate plan, failures in maintenance can leave you and your family stranded at a time of need.
In your original estate plan you made many decisions:
Those decisions were all based on your beliefs at that time and the circumstances at hand.
Like it or not, things like your net worth, friends, acquaintances and even your state of residence may change over time.
While your brother was best friends with your children when they were young, it made sense to name him as their guardian in your absence. However, he may have since suffered a debilitating illness or injury that would make it difficult for him to raise your children, if needed. Maybe the ugly fight you two had about the latest election over Thanksgiving dinner changed your mind about him as their guardian.
All of life’s moving parts require you to regularly review and revise your estate plan.
Not only may your personal circumstances change, so do the laws that affect your estate plan. For example, the federal estate tax was a major concern for many people about 20 years ago when the tax-free amount – also known as the personal exemption – was $650,000 (1999). Sophisticated plans that came with extra costs and steps were required to avoid the costly estate tax (upwards of 55%). However, the personal exemption has increased several times over recent years, and is now $11.4 million per individual and $22.8 million for married couples. Plans established 20 years ago to address the estate tax would now most likely cause unnecessary additional costs of time, legal and accounting fees, and income taxes.
The many moving parts of the legal system require you to regularly review and revise your estate plan.
No one has a crystal ball to foresee how life or laws will evolve over time. We shouldn’t try to establish a single estate plan for our entire lifetime. It’s important to consider the reasonable and foreseeable future when making decisions. If you were to pass or become incapacitated during that time frame, who would you want to take care of your medical needs, manage your financial affairs, and raise your children? Three to five years after first completing the documents, pull them out to see if they match your current wishes. If they don’t, make the necessary changes.
Remember, failure to regularly update your estate plan can leave you and your family stranded at a time of need.
This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.