I am often asked the question how often one should review and update one’s estate planning documents, including your will and/or trust. My general answer is that you should treat your estate planning documents the same way you treat your health. Most people make an annual visit to the doctor to make sure that everything is functioning correctly. While annual visits to the wills and trusts attorney is probably a bit much, seeing him or her every two to three years is most appropriate.
The trusts and estates field of law is always changing. In the last year alone, the federal legislature has adopted several new statutes that affect estate plans, and it is likely to adopt even more.
Further, the federal government’s income, estate and gift tax laws are constantly changing. So even if your trust was “up to date” in 2005, it is likely a little behind the times in 2018. As an example, just a few years ago the federal estate tax exemption amount stood at $675,000. Today it stands at $11.2 million.
If you have moved to Florida and your documents were drafted in another state, then it is time to review your plan. Each state’s laws are different, and those differences can result in different financial outcomes in your plan.
If one of your beneficiaries is going through a divorce, or has had financial troubles, or receives Medicaid or similar government aid, then your plan should be amended to protect those beneficiaries.
New grandchildren often cause changes to an estate plan. The purchase and sale of various types of properties might warrant a change.
There are other circumstances that would prompt a visit to the wills and trusts attorney’s office. These include a material change in your financial circumstance, family or other personal matters. You shouldn’t wait to revisit your documents if such matters have happened or are pending.
Many clients think that their attorney’s office will call them if a law change occurs that would affect their planning. Don’t count on it. While my office, for example, would love to be able to do that, it is impossible. A change in the IRA distribution rules, for example, might affect one client but not another. To construct a database that accurately keeps track of how any change would affect any particular client would be a cost that most of our clients wouldn’t want to incur.
We therefore advise our clients to come see us every two years or sooner if their family or financial circumstances change. That way, we can be assured that your plan is up to date.
So if you haven’t dusted off the estate plan in a while, don’t let it go too far before you review and make appropriate changes.