Most people feel a sense of accomplishment after drafting and executing an estate plan. Afterwards, it is commonplace to file away the paperwork and promptly forget about the documents. The issue in this is that most people’s lives change between the creation of an estate plan, and it will need to be updated accordingly. In fact, recent studies have shown that people at all levels of wealth, including the very rich, have estate plans that are routinely more than five years old.
As some estate planning attorneys have noted, an estate plan is not like a time capsule that should only be opened at a future time. An estate plan needs to be routinely updated as life events occur. You should plan on regularly updating your estate plan every three to five years; however, it should occur more often if major events happen. In some cases, estate plans that have not been updated have led to large, public disputes between family members. These fights have destroyed families as well as the inheritances that they were supposed to have. These situations are even more unfortunate because the vast majority of these disputes could have been avoided if the estate plan was up to date.
Common Excuses Why an Estate Plan is Not Updated
There are a few common reasons why people do not update their estate plan after it has been created. Some of the most common excuses include:
· Avoiding uncomfortable conversations with family
Some people do not like having conversations with their family about financial matters or estate planning. They are afraid that it will cause disputes, or they simply do not like to think about end of life planning.
· Revising an estate plan costs money
Some people think that once an estate plan is done there is no reason to spend more money to revise it. Unfortunately, by not revising the estate plan many more problems can arise.
· People believe that they have more time
Many people simply procrastinate on revisiting an estate plan. Either they believe that they will have more time to do it after a major life event or they just do not feel like putting in the time at the moment.
· People do not realize that an update is needed
A lot of people do not realize when it is that they need to update a plan. By knowing when an estate plan needs to be revised, many people would be apt to look at their plans again.
Reasons Why You Should Update Your Estate Plan
The simple way to think about when you should be revisiting your estate plan is to think about updating your plan when there is either a meaningful change in your life or every three to five years as a rule. A meaningful change in your life can refer to many different things, including:
· Marriage · Birth or adoption of a child · Launch of a new business · Divorce · Death in the family · Buying or selling of any major assets
…and anything else that occurs that would be considered a major change.
If no major event occurs, by revisiting your estate plan with an attorney every three to five years you can take advantage of any new tax or estate laws that have been enacted. By applying the new laws to your plan your attorney can ensure that even more of your estate is going to your family and loved ones.