If you have an estate plan already in place, then you are ahead of most Americans. However, because life and finances can change rapidly, your estate plan should be flexible to reflect those changes.
There are a variety of reasons you may need to update your estate plan. Estate planning professionals recommend updating your estate plan every three to five years or after any significant life changes. The following is a list of factors that may be cause for revision:
- Change in tax law. The 2017 Tax Cuts and Jobs Act has far-reaching impacts on estate planning. The tax reform legislation affected a variety of income tax rates, brackets and deductions. The law significantly raised the estate tax exemption, which may unveil new financial opportunities for your estate plan.
- You relocated to a new state. A change in state residency warrants an update to your estate plan because each state has its own estate planning laws. State laws can vary widely regarding property rights for spouses, powers of attorney, living wills and more.
- A substantial change in your assets. Any time you experience a notable shift in the value of your estate, whether an increase or decrease, is a reason to strategize changes for your estate plan. Your new circumstances may prompt you to modify how you allocate your property.
- Marriage or divorce. A change to your marital status is an important reason to review your estate plan. You will likely want to adjust your plan, so it reflects your new spouse or that your ex-spouse is removed. A new spouse should be included in the disposition of your estate. Be sure to update beneficiary designations on financial accounts and life insurance policies and appoint new powers of attorney.
- You had a child. If you welcome a new child to the family, be sure to appoint a guardianship provision in your estate plan. The person you designate will be a surrogate parent and raise your child if you die early or become legally incapacitated. If your estate plan does not name a guardian, then a New Jersey court must appoint a guardian.
Updating and maintaining your estate plan is essential even if you have not experienced any of these life changes. A skilled estate planning attorney can review your estate plan to ensure that it evolves with your changing financial and personal circumstances.