How Often Should You Review and Update Your Estate Plan?

How Often Should I Review and Update My Estate Plan?

If you’ve ever been led to believe that estate planning is a “set it and forget it” solution, think again. Your will and estate planning documents are dynamic. Just as your life, relationships, and family composition may change over time, so do your needs, as represented by your legacy planning. By keeping these important legal documents up to date, you ensure that your loved ones will be left with a clear road map to follow when you pass away.

General Update Timeframe

Most experts recommend estate plans be reviewed every three to five years. At Cava and Faulkner, we understand people and their wishes can change; we know the law will change. For this reason, we review all client plans at least every three years and annually through our Family Wealth VIP Membership Program. This service ensures your wishes are up-to-date and ready to meet any eventuality.

Life Events Require Immediate Change

While regular maintenance is key for general upkeep and ensuring your estate plan continues to comply with relevant statutes, certain life events require immediate changes to your legacy planning.

Marriage or Divorce

As significant turning points in life that carry much emotional and personal weight, marriage and divorce signify critical legal changes. In the event of marriage, you will likely want to add your spouse, and possibly stepchildren, to your will to ensure they are cared for in the event of your passing. In the case of divorce, California Probate Code § 6122 explicitly removes a former spouse from your will, and they will not be due any inheritance. If your estate plan is not updated, this may result in an unexpected or unwanted re-distribution of your assets.

Birth or Adoption

A new child brings great joy to any family. Children may also change the way you wish to distribute your assets at death. In the case of an adopted child, as soon as the adoption process is finalized, the adopted child has the same rights as a child born into a family.

Significant Asset Loss or Gain

When you purchase a new home or meet with major or sudden success in business, your assets and net worth make a sudden shift. This new value should be reflected in your legacy and be passed down to the next generation smoothly by being properly detailed in your estate plan. Likewise, when property or other valuable assets are lost, your will should be modified to reflect the change.

Relocation

California has its own unique laws regarding end-of-life legal processes, but other states may handle things differently. For example, California abolished the state estate tax in 2005. If you were to move to Oregon or Washington, you may need to consider updating your documents to accommodate the mandatory state taxes.

State or Federal Tax Law Changes

New laws are made at the state and federal levels every year. Some are positive for those considering estate planning, and some may be regarded as unfavorable, such as requiring an heir to move into inherited property as their primary residence to keep property taxes low. In any case, the certainty is that change will continue to exist, and legal documents must reflect and respond to these changes to stay relevant and effective.

Death or Incapacity of Named Parties

When a beneficiary dies, the distribution of assets may be affected. If a trustee becomes unable or estranged from the family, it is advisable to change the names in the will as soon as possible.

What Can Happen if I Allow My Estate Plan to Go Out of Date?

If you fail to keep your estate planning documents up to date, your loved ones will face greater challenges and may wind up in court to prove the validity of your will. Some risks of not updating your will that your surviving family may experience include the following:

• Incorrect distribution of assets
• Time-consuming legal process
• Expensive court costs
• Outdated beneficiaries
• Difficulty in carrying out medical wishes

If I Already Have Estate Planning Documents, Can I Update Them Myself?

Some minor changes could be made yourself, but we sincerely suggest you use the services of a professional estate planning attorney at Cava & Faulkner. When you hire us, you can have peace of mind that your documents will be legally sound and will hold up in court long after you are gone.

Does My Will Need to Be Updated If I Recently Created a Trust?

Yes. Creating a trust is an excellent way to preserve assets for future generations by legally avoiding the taxes and attorney fees associated with the time-consuming probate process. If your will does not include it, it should be updated to include a “pour-over” provision. This will ensure any assets not in the trust at the time of your passing will be placed in the trust at that time. An even more secure option is to work with the team at Cava & Faulkner to transfer all your assets to the trust well in advance, reducing any potential confusion.

Is There Anything I Should Consider Before My Next Estate Planning Update?

If it has been some time since you last updated your estate planning documents, now is a good time to ensure that all your digital assets are included. As our society moves at lightning pace towards more advanced technologies, the number of accounts and digital assets a single person owns has grown exponentially. Some items to consider include:

• Online investment accounts
• Internet-based payment apps
• Cryptocurrency wallets
• Rewards programs that hold monetary value
• E-commerce platforms
• Domain names
• Website content and blogs

Looking to Update Your Estate Plan? Hire Someone You Can Trust

At Cava & Faulkner, we establish long-term relationships with our clients. We often provide estate planning for multiple generations. We add value to the process because we care; estate planning is about more than money. Your legacy should include all your intellectual property and tangible assets. If you want to update your estate plan or keep it constantly valid, we provide annual membership services, too. Contact us for a free consultation at 916-831-7565. We look forward to working with you to help you achieve peace of mind regarding passing on your estate to those you love.