Most people assume that once they create their estate plan, they can set it and forget it. Not only is this not the case but also, “forgetting about” your estate plan can have adverse and costly consequences.
New laws, life events, the accumulation or loss of wealth and other factors can all affect your estate. While an estate planning professional can help you stay up-to-date with any legal changes that may affect the handling of your estate, you should familiarize yourself with the list of events that may warrant a change to your plan. Fidelity explains how often you should review your estate plan and which events warrant modifications.
Estate plan reviews: The rule of thumb
According to Fidelity, you should review your estate plan often. How often though?
While the answer depends on the complexity of your estate plan and unique preferences, the publication suggests conducting a financial review annually, quarterly or semi-annually to identify any major changes that may warrant a modification to your estate plan. When it comes to your estate plan specifically, Fidelity suggests conducting a review every three to five years, or when you experience a major life event.
Major life events that may trigger a change
Regardless of when you last conducted a review of or made a change to your estate plan, certain life events may necessitate an additional review or modification. Common triggering life events are as follows:
- The birth or adoption of a new child or family member
- A death in the family, or a change in the number of dependents you care for
- A marriage or divorce
- A disability or illness
- When a child or grandchild comes of age
- When a child or grandchild needs educational funding
- The purchase of a home or other significant asset
- A major increase or decrease in the value of your estate or investments
You may also want to modify your estate plan if you or your spouse’s financial goals change, if your long-term care or life insurance coverage changes, or if you receive a large inheritance or gift. Taking on more debt or borrowing money from a loved one may also trigger the need for a modification. Finally, a career change, new business or job promotion may also warrant a review or modification.
Maintaining a current estate plan is crucial to ensuring your loved ones and estate representative uphold your wishes. A professional can inform you of when you need to make changes and, just as importantly, help you make modifications that are in line with your long-term goals and wishes.