Many people create an estate plan and then rarely think about it. However, estate planning isn’t a one-time event but rather an ongoing process that requires periodic review and updates. Life events happen, laws change, and your preferences may shift over time. Understanding when to update your estate plan can protect your family and ensure your wishes are honored.
Major Life Events That Require Estate Planning Updates
Marriage or Divorce
Getting married or divorced significantly changes your family structure and likely your wishes regarding asset distribution. In Illinois, divorce doesn’t automatically remove an ex-spouse from all estate planning documents. Without an update, your ex-spouse might still inherit assets, like retirement accounts, or maintain authority over healthcare decisions.
After marriage, you’ll likely want to add your new spouse as a beneficiary and possibly as your healthcare or financial power of attorney. Estate planning considerations for newlyweds should include reviewing beneficiary designations and trusts and creating an updated will that reflects your new family situation.
Birth or Adoption of Children
The arrival of children calls for several important estate planning updates. You need to name guardians who would raise your children if something happened to you. Without this designation, a court could decide who cares for your children in your absence.
Your estate plan review should address how and when children will receive inheritance, as well. Many parents establish trusts to manage assets for minor children rather than having assets go directly to young beneficiaries. An updated will with trust provisions can protect your children’s financial future.
Death
If someone named in your estate plan passes away, you need to update your estate plan documents. This includes replacing a deceased executor, trustee, guardian, or power of attorney agent. You’ll also need to redistribute inheritance shares if a beneficiary has died.
Without these estate planning updates, your estate may face complications during probate, potentially leading to outcomes you never intended.
Relocation to a Different State
Estate laws vary between states. If you’ve moved to Illinois from another state, you should have your estate plan reviewed by an Illinois estate planning attorney. Some documents may need to be revised to conform with local laws.
Financial Changes Requiring Estate Plan Reviews
Changes in Assets
Major financial changes such as buying or selling a home, starting or selling a business, receiving an inheritance, or significant investment gains or losses can impact your estate plan. Such changes might affect your tax situation or call for different distribution strategies.
For business owners, succession planning should be integrated with your personal estate plan. If you’ve acquired or sold a business since your last estate planning review, an update is essential.
Business Changes
Business owners face unique estate planning considerations that often require updates as the business evolves. Starting a new business, experiencing significant growth, acquiring competitors, or preparing for succession all necessitate estate plan reviews.
If you’ve established business partnerships, your estate plan should address what happens to your ownership share upon your death or incapacity. An outdated plan might leave your family without proper control or compensation for your business interests. If you’ve added key employees or family members to management roles, your succession plan should reflect these changes.
Business valuation fluctuations also trigger the need for estate planning updates. As your business grows in value, you may need more sophisticated tax planning strategies to minimize estate taxes. Retirement plans, buy-sell agreements, and insurance policies tied to your business should all be reviewed regularly.
Law and Tax Changes
Changes in Estate Tax Laws
Federal and state estate tax laws change periodically. These changes can often impact larger estates. Even for moderate estates, though, tax law updates might affect the strategies used in your plan. Regular estate planning reviews ensure your plan accounts for current tax laws.
Healthcare & Medical Directive Law Changes
Older healthcare directives may not address newer medical technologies or treatment options. They may also not comply with current legal requirements, as laws regarding medical directives, like healthcare powers of attorney, can evolve. Updating your estate plan keeps these documents current and effective.
Personal Preference Changes
Changes in Relationships
Relationships naturally change over time. You may want to add or remove beneficiaries based on changing relationships. For example, maybe you’ve developed a close relationship with a stepchild, or you’ve had a falling out with a previously named beneficiary.
Your choice of executor, trustee, or power of attorney agent might also change as relationships evolve. Estate planning considerations should include regularly reviewing these key roles to ensure they still align with your wishes.
Charitable Intentions
Many people develop charitable interests as they age. You might want to add charitable bequests or establish a charitable trust as part of your estate plan. These additions can satisfy personal values while potentially offering tax benefits. An updated will with charitable intentions can create a lasting legacy beyond family inheritances.
How Often Should You Review Your Estate Plan?
Even without major life changes, we recommend reviewing your estate plan every 3-5 years. This regular review ensures your plan still reflects your wishes and complies with current laws.
For specific documents:
- Wills and trusts: Review every 3-5 years
- Powers of attorney: Review every 3-5 years
- Beneficiary designations: Review annually
- Guardianship provisions: Review when children reach new developmental stages or there are changes in the lives of designated guardians
The Estate Planning Review Process
A proper estate plan review includes:
- Reading all existing documents
- Confirming your executors, trustees, and agents are still appropriate
- Verifying guardianship designations for minor children or dependents
- Checking beneficiary designations on all accounts
- Reviewing asset inventory and ownership structure
- Checking whether documents comply with current laws
- Ensuring your plan aligns with your wishes for your business
Contact Crosby Law Firm
If you’ve experienced any of these life changes or it’s been more than 5 years since your last estate planning review, it’s time to update your plan.
Contact Crosby Law Firm today to schedule a free initial consultation. Our experienced estate attorney can help ensure your plan still accomplishes your goals and reflects your current wishes.
Serving clients throughout Northern Illinois, including Rockford, Belvidere, and surrounding communities since 1980.
