When Should You Update Your Estate Plan? 8 Life Changes Illinois Families Should Know
Creating an estate plan is an important step in protecting your family, your assets, and your wishes. But signing your estate planning documents isn't necessarily the end of the process.
Your estate plan should change when your life changes.
Marriage, divorce, children, a new home, changes in your finances, the death of someone named in your documents, or even moving to another state can affect whether your existing estate plan still accomplishes what you intended.
So, how often should you review your estate plan and when should you update it?
For many families, reviewing an estate plan every few years is a good starting point. But certain life events should prompt a review sooner.
Here are some of the most important times to take another look at your estate plan.
1. You Got Married
Marriage changes your family and may change how you want your assets, property, and responsibilities handled.
After getting married, review your will, trust, beneficiary designations, powers of attorney, and healthcare documents to make sure they reflect your current wishes.
This can be especially important for second marriages or blended families, where there may be children or assets from previous relationships to consider.
2. You Got Divorced or Remarried
Divorce is one of the clearest reasons to review an estate plan.
Your former spouse may be named throughout existing documents as a beneficiary, trustee, executor or agent. Although state law may affect certain provisions after divorce, relying on default legal rules rather than reviewing your documents can create unnecessary uncertainty.
Remarriage can introduce another layer of estate planning considerations, particularly when spouses have children from previous relationships.
An Illinois estate planning attorney can help determine whether your existing documents still reflect what you actually want.
3. You Had or Adopted a Child
Welcoming a child changes more than your family. It changes what your estate plan needs to accomplish.
Parents should consider questions such as:
Who would you want to care for your minor children if you could not?
Who should manage assets on their behalf?
How and when should children receive an inheritance?
A will may allow parents to nominate a guardian, while a trust may provide additional control over how assets are managed for children.
For more on this question, read Do Young Families Need a Trust If They Are Not Wealthy?.
4. You Bought or Sold a Home
Real estate is often one of a family's largest assets.
Buying a home, selling property, purchasing a second home, or acquiring investment real estate may affect your estate plan and how your assets should ultimately be handled.
If you have a trust, you may also need to determine whether newly acquired property should be titled or otherwise coordinated with that trust.
Don't assume that creating the trust years ago automatically accounts for everything you acquire later.
5. Your Financial Situation Changed
You don't have to become extraordinarily wealthy before financial changes matter.
A significant increase or decrease in assets, receiving an inheritance, opening new investment accounts, changing life insurance coverage or accumulating substantial retirement assets can all be reasons to revisit your plan.
Your estate plan should reflect the life and financial picture you have today, not the one you had when the documents were originally signed.
And if you've delayed planning because you don't consider yourself wealthy, read Do I Need an Estate Plan If I'm Not Wealthy?.
6. You Started, Bought or Sold a Business
Business owners have additional estate planning considerations.
What happens to the business if you die?
Who can make decisions if you become incapacitated?
Should ownership pass to family members, business partners or someone else?
Does your estate plan coordinate with your operating agreement, buy-sell agreement or other business documents?
Starting, growing, selling or closing a business should prompt a conversation about whether your estate plan still works with your business interests.
7. Someone Named in Your Estate Plan Died, or Your Relationship Changed
Your estate planning documents probably name several people.
You may have an executor, trustee, healthcare agent, financial power of attorney, guardian, or beneficiaries.
Over time, those relationships can change.
Someone may die, become ill, move away, or simply no longer be the person you would choose for that responsibility.
Ask yourself:
If I were creating my estate plan today, would I still choose the same people?
If the answer is no, your plan deserves another look.
8. You Moved to Illinois or Left Illinois
Estate planning laws vary from state to state.
If you created your estate plan while living somewhere else and have since moved to Illinois, it is worth having your existing documents reviewed by an Illinois estate planning attorney.
Likewise, if you're planning to move out of Illinois, consider whether your documents should be reviewed under the laws of your new state.
Your estate plan doesn't exist in a vacuum; it's governed by state law, which makes relocation an important time for a legal checkup.
How Often Should You Review Your Estate Plan?
Even when nothing dramatic has changed, your estate plan shouldn't sit untouched for decades.
A common approach is to review your estate plan approximately every three to five years, while also reviewing it after significant changes in your family, finances, property, health, or relationships.
You don't necessarily need to rewrite your entire estate plan every time you review it.
Sometimes the answer is simply confirming that everything still works.
The important part is making sure the plan you created years ago still represents the life you have today.
What Should You Review in an Estate Plan?
An estate plan review may include looking at your:
Last will and testament
Revocable or irrevocable trusts
Powers of attorney for property
Powers of attorney for healthcare
Living will or advance healthcare directives
Beneficiary designations
Life insurance
Retirement accounts
Real estate ownership
Business interests
Executors, trustees, guardians and agents
These pieces should work together.
For example, changing your will doesn't automatically change the beneficiary named on a retirement account or life insurance policy.
That's one reason reviewing the entire estate plan, rather than a single document, can be important.
Can an Estate Plan Become Outdated?
Yes.
An estate plan can still contain legally executed documents while no longer accurately reflecting your family, assets, relationships, or intentions.
That's what makes outdated estate plans particularly easy to overlook.
You may technically have an estate plan.
The better question is:
Does the estate plan you have still do what you want it to do?
Estate Planning Isn't One and Done
Your life five or ten years from now may look very different from your life today.
Your family may grow. Your relationships may change. You may buy a home, sell a business, receive an inheritance, become a grandparent, or move to another state.
Your estate plan should be able to evolve with you.
As we discuss in Estate Planning Helps Ensure That as Life Changes, Your Plans Change With It, planning is ultimately about making sure the documents you've created continue to reflect the people, responsibilities, and priorities that matter to you.
Is It Time to Review Your Estate Plan?
If it has been several years since you reviewed your estate planning documents — or your life has changed significantly since you created them, this may be a good time to find out whether your plan still works the way you intended.
Russo Law Offices helps individuals and families in Hinsdale and throughout Illinois create and review estate plans, wills, trusts, powers of attorney, and related planning documents.
Schedule an Estate Plan Review With Russo Law Offices
The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. Every individual's circumstances are different, and estate planning laws may change. Consult with a qualified estate planning attorney regarding your individual circumstances.
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*The information provided in this blog post is intended for general informational purposes only and should not be construed as legal advice. Each individual's situation is unique, and the laws regarding estate planning can vary by jurisdiction. It is essential to consult with a qualified estate planning attorney to discuss your specific circumstances and to receive personalized legal advice. Russo Law Offices is not responsible for any actions taken based on the information contained in this post.