When to Update Your Estate Plan

It is a good idea to at least contact your estate planning attorney every five years or so. There may be changes to the tax law or other state laws regarding inheritance and probate.

In addition, there are certain major life events that may require you to update your plan. If any of these occur, you should also make sure to review and update the beneficiaries for non probate assets like life insurance or retirement accounts.

Updating your estate plan when you move from one state to another

Your estate planning documents will still be valid if they were properly executed in the prior state. But because probate laws and estate tax laws vary from state to state, you should review your estate plan to make sure that they still do what you want them to do under Massachusetts law.

Updating your estate plan after divorce

Many married couples build their estate plans around a spouse. It is often the spouse who is the first choice for personal representative, health care proxy, and power of attorney. Once your divorce is finalized, the law will automatically undo many parts of your will that name your ex-spouse, but if you don't put something or someone in their place it will be as if you did not have those documents at all.

There are other things you may not want to change. For example, if your ex-spouse is named as trustee of a trust for the sole benefit of your children, you may choose to keep it that way. More likely if you have a trust it provides first for your spouse and then for your children, which is something you are probably going to want to change.

Updating your estate plan after the death of a spouse

Like a divorce, everything in your plan that was built around your spouse will need to be re-written.

Also, ideally you both had your estate plans properly set up before this. If that is the case, you were able to combine your exemptions for purposes of the Massachusetts estate tax. This is no longer an option for you as the surviving spouse, so you will want to speak with your estate planning attorney about whether there is anything you can do to avoid or minimize estate tax.

Updating your estate plan after remarriage

Second marriages often involve children on both sides, and more complex estate planning decisions for both spouses. You also now have another opportunity to pool estate tax exemptions if you want to.

Updating your estate plan when you become an empty nester

By the time your children become adults, your estate planning goals and needs have probably changed. You no longer need to worry about guardianship, for example. Also, many people with young children structure their plans to take care of the spouse during his or her lifetime and give the remainder to the children after that. Now that your children are adults, you may want to consider setting aside some assets to go to them directly.

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Updating your estate plan on the birth or adoption of a child or grandchild

Your own first child absolutely means you need to have an estate plan, if for no other reason than choosing a guardian for that child if something were to happen to you and the other parent. Adding grandchildren to your family may be an opportunity for you to both move assets out of your estate for estate tax purposes and also start building a legacy for your grandchildren through the use of trusts.

Updating your estate plan after the death of your parents

In addition to serving as a reminder for many people of the importance of having their affairs in order, the death of a parent can come with a substantial inheritance. This may cause you to need estate tax planning that you did not need before.

Updating your estate plan when you reach age 60

Sixty is not a magic number, but sometime in this decade is a good time to review a few things.  First, it is a good time to start planning for the cost of long term care so you don't erase all of your assets to pay for it if you or your spouse need it. The reason to do it at this age is that Medicaid will consider anything you gave away within five years of applying for benefits to still be yours. This is called the five year look back. You can shelter some assets in an asset protection trust, but if you want it to be effective you need to do it at least 5 years before you need care.

Second, your needs and goals may have changed dramatically. You may not want to continue paying for a large life insurance policy now that you are done with the major expenses of raising children. Because the people in your life are aging too, now is a good time to look at the people you have named as executors or trustees or successor trustees to make sure everyone is still available and able to fulfill those functions.

Don't forget your non probate assets

At each of these stages, remember that you have certain assets that will distribute automatically outside of probate. These are included in your estate for tax purposes, but changes to your estate planning documents will not change those distributions unless you do. Any time you decide to review and update your estate plan, you should also check the beneficiary designations on your life insurance and retirement plan accounts to make sure they are still consistent with what you want.

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