Why It's Time To Update Your Estate Plan

There are two widespread errors in estate planning. One error is not to have a will or other key elements of a plan. The other error is to fail to update the will and estate plan. Even if you have an estate plan, your work isn’t done. Estate plans need to be reviewed and revised from time to time.  
If your estate plan is three or more years old, you should give our office a call to discuss any changes that might require an update to your will or trust.  In addition, an estate plan should be reviewed when specific events occur in your life as these events or changes in circumstances often create a need to update the plan. Here’s a list of the most likely events that should cause you to contact our office.

You moved to another state. Estate planning laws aren’t national. Each state has its own laws with their difference nuances. Some of the differences can seem trivial, but others are more substantive. State laws also vary upon other elements of the estate plan, such as powers of attorney, advance medical directives, living wills and more. If you moved, these documents need to be updated for your new state or they could be ineffective. We can help you with ensuring that you can establish proof that you changed residence, as this is particularly important when you have a substantial estate and moved from a state with inheritance or estate taxes.  Arizona does not have an inheritance tax, as of 2019.

The objects of your affection change. For most people, this happens when there’s an addition to the family. There might be a new child or grandchild. It’s best to revise the documents so the new family members are named and specifically included. You also might have a new in-law or feel it is appropriate to delete someone who formerly was included in the estate plan. There might be a death or divorce in the family.  You also might want to disinherit someone who’s been irresponsible with money or is estranged from the family or perhaps you want to place some restrictions on access to funds.

Your assets or liabilities change. A significant change in the value of your estate since the plan was drafted should cause a review, whether the estate’s value increased or decreased. A change in the composition of your estate also merits a review. You might have sold an asset, such as a business or real estate, that was a major part of the estate. Or you might have added such an asset. You might have inherited assets yourself.  Inherited assets are separate property, unless you co-mingle them to the point you can’t trace their separateness anymore. These sorts of changes warrant a reassessment of the plan.

Your qualified retirement plan is outdated. One of the major mistakes in estate plans is failing to update the beneficiary designations of IRAs, 401(k)s and other retirement plans. The beneficiary of these accounts is determined by the beneficiary designation form on file with the plan, not your will or trust. Updating the beneficiary designations is especially important if the value of your account increased substantially.  Beneficiary designations also control who receives annuities, life insurance, bank accounts, some financial accounts, and other assets.

Personal Representative or Trustees become inappropriate or unable to act. The executors or Personal Representatives as they are called in Arizona and trustees are the people who implement your plan and often determine how successful it is. Carefully reconsider the people appointed in your estate plan. Are they still able and willing to perform these jobs as you’d like them done? Has your estate changed so that someone else now is a better choice? Has anyone aged, moved away or passed away? Determine who is the best choice for these positions today. Professional trustees can also be a good option for some clients, and we have relationships with several in town.  Some are reasonably priced. 

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