Legacy Assurance Plan: 5 Types of Events that Should Have You Seeking an Estate Plan Review

Summary: There are many events in life that may be indicative of the need to get your estate plan reviewed and possibly updated. While many people recognize the birth children or retirement as events that highlight the need for a plan review, your plan probably needs reviewing much more frequently than that. Events ranging from divorces, deaths, catastrophic injuries, out-of-state moves and changes in the law are all things that may mean that you need a plan update to keep your plan optimized to accomplish your goals.

An attorney from Michigan wrote a column recently for the Port Huron, Mich. newspaper. In that article, the author stated that he'd read that, according to recent survey research, "the average time between estate plan updates was almost 20 years." As the author pointed out, this result is intuitively not totally surprising. When you look at the type of life events that take place in many families' lives, they can tend to take place in roughly 20-year intervals. A couple might create a plan once they've had children. They might update their plan once their children have achieved adulthood, left home and got married and/or had kids of their own. In many cases, this latter list occurs about two decades or so after a couple initially had their kids. Roughly two decades after that, most couples have retired and update their plans accordingly.

While this is a common approach, it is, for most people, not an optimal one. Many legal experts agree that a properly maintained estate plan will need updating far more often than just every 20 years. That's because there are many things beyond just your having kids, your kids getting married, your having grandchildren or your entering retirement that may trigger a need for a plan update. Here's a quick rundown of events that might mean that an update is in order for your plan:

(1) Divorces. Sure, births and marriages are important events that may point to the need to update your plan. But they are not the only ones. If you get divorced, that would obviously indicate that a plan review (and likely some updates) are needed in order to ensure that you're not leaving wealth to someone you no longer desire to include in your legacy or (if perhaps you've remained close with your "ex") excluded someone you did want to leave something. If your child gets divorced, that may also mean that you need a review and maybe an update. Did you include your (now former) son- or daughter-in-law in your plan? Did you do so by name? If you did and you no longer want to, or if you still want to but did not name that person by name, you may need an update.

(2) Deaths. Death unfortunately is a part of life. Sometimes people in our lives die unexpectedly and prematurely. When those events happen, they can impact your plan. If one of your beneficiaries dies before you, you'll probably want to investigate making an update. This can be especially true if that person is a child, so that you can clearly instruct what happens to his/her share. Should that wealth go his/her children, split between your other children (his/her siblings) or distributed elsewhere? Also, if one of your personal representatives or successor trustees has just died, even if that person was only an alternate trustee or personal representative, you may desire to update your plan to add someone new to your list of fiduciaries. That way, you can remain just as protected as you were against future unexpected events leaving you without someone named.

(3) Catastrophic injuries. A major injury to a loved may have a substantial impact on your plan, as it may mean you need significant changes in order to meet your goals. If you've left a distribution in your plan to someone who has suffered an injury/illness and now receives needs-based government benefits, you'll want to explore an update. Leaving your plan unchanged, and leaving a distribution outright to that beneficiary, could force him/her into the difficult position of possibly having to disclaim that distribution or, worse, losing his/her eligibility to continue receiving benefits. With a proper update, which may include a Supplemental Needs Trust, you can include that person in your plans and not risk creating a loss of benefits.

(4) A move out of state. The laws regarding estate planning are different from state to state by varying degrees. Some states' laws are very similar to others, while others are significantly different. Because of this wide degree of variability, whether or not you'll need an update (and how much of an update you'll need) depends on where you're moving from and what state you're moving to. Regardless of the states involved, it is a good idea to get a plan review. Even if you only need a very minor update (or even no update at all,) it is beneficial to make sure that the out-of-state move you've completed won't cause you any problems later on.

(5) Legal changes. Changes in the law can be good, bad or neither. The only way to find out is to have your plan reviewed. If the change is good, then an update can allow you take advantage of the change. If it is bad, then an update can help you minimize or avoid the negative impact of the new laws.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.