The start of a new year is a time for both beginnings and setting goals for the future. To that end, it’s also the perfect opportunity to revisit your estate plan to better ensure it reflects your current circumstances, priorities and wishes. Life is dynamic, and significant changes in your personal, financial or legal circumstances can impact the effectiveness of your estate plan. Taking the time to review it annually can help you prevent potentially costly oversights and facilitate a well-founded peace of mind.
An estate plan is not a “set-it-and-forget-it” document. Circumstances change over time, and an outdated plan may no longer align with your goals or protect your loved ones as intended. Regular reviews can help you to:
- Reflect Life Changes: Marriage, divorce, the birth of a child or the death of a loved one are just a few events that may necessitate updates to your estate plan.
- Adapt to Financial Shifts: A significant increase or decrease in wealth, acquiring new assets or starting a business requires revisiting your plan to ensure proper distribution.
- Account for Legal Updates: Tax laws and estate planning regulations evolve. An annual review can help to better ensure that your plan complies with the latest legal requirements and allow you to maximize tax savings.
While revisiting your estate plan may not be the most exciting way to start the new year, it is a task that will hopefully allow you to benefit from greater peace of mind as the year progresses and your life circumstances evolve.
Key issues of concern
As you revisit your estate plan, a few concerns should top your priority list:
- Your Will and Trusts: Work to ensure that your will accurately reflects your wishes, including any new beneficiaries or changes in asset distribution. If you’ve established trusts, verify that they are properly funded and serving their intended purpose.
- Beneficiary Designations: Retirement accounts, life insurance policies and other payable-on-death accounts often bypass the terms of wills. Confirm that the beneficiaries listed on these accounts align with your current intentions.
- Power of Attorney and Health Directives: Review who you’ve designated to make financial or medical decisions on your behalf. Confirm that these individuals are still the best choices based on your current relationships and their ability to act in your best interests.
- Guardianship Provisions: If you have minor children, revisit your chosen guardians. Life changes, such as relocation or shifts in personal relationships, may influence your decision.
- Tax Strategies: Annual reviews allow you to incorporate any new tax-saving opportunities, such as gifting strategies or adjustments to your trust structure, to minimize estate or income tax burdens.
Estate planning is complex, and the laws surrounding it are intricate and ever-changing. If you have questions or concerns as you conduct your review, don’t hesitate to seek personalized legal guidance and support.