Some people think that estate planning is a once in a lifetime project. But, as John F. Kennedy said, “change is the law of life.” Periodic review of an estate plan is essential to ensure that your plan continues to accomplish your goals in the most effective manner.
Here are the top 10 reasons you need to review your estate plan periodically:
- Change in Residence. While estate planning documents typically are valid from one jurisdiction to another, each state has its own peculiarities. For example, a couple moving from a separate property state to a community property state might find it advantageous to convert their separate property to community property. This can allow for advantageous income tax treatment of the property at the death of the first spouse.
- Change in Assets. A significant change in the nature or extent of your assets may give rise to different estate planning opportunities. For example, the acquisition of a farm or business may raise issues of succession planning and discounted gifting.
- Inheritance. If you or your spouse have received or expect to receive a significant inheritance, there may be new opportunities to reduce taxes or provide creditor protection.
- Change in Tax Law. As we all know, Congress rarely leaves tax law alone for long. Changes in tax law can mean that your estate plan no longer accomplishes its goals.
- Changes in Non-Tax Laws. Periodically, state legislatures change substantive non-tax laws. These laws may affect who gets your property or how your trust may be managed.
- Change in Desires. With the passage of time, you learn more about yourself and others. For example, you may decide that your brother John, who lost everything in Enron and WorldCom, may not be the best selection to manage your assets.
- Illness. If you or one of your family members becomes seriously ill, you may want to consider changing your estate plan to reflect their increased needs. For example, if a loved one now has special needs, you can leave assets in a trust that will not disqualify him or her from receiving government benefits.
- Birth or Adoption of a Child. The addition of a new family member can radically alter your estate plan. It is likely that, if your spouse and you are both gone, you no longer want your assets to go to your parents. Also, you will need to appoint someone to act as guardian for the new child.
- Divorce. According to the National Center for Health Statistics, approximately one-half of first marriages end in divorce. Divorce is particularly disruptive of an estate plan. Goals which you had before, such as providing for the now ex-spouse, probably have changed. A new plan should be put in place quickly, especially if the end of the marriage was not harmonious.
- Marriage. When you marry (or remarry), you and your spouse bind your lives and futures together. Marriage can automatically give each spouse some rights in each other’s property. However, marriage does not automatically change your will or trust to provide for the new spouse. It is important to examine your estate plan in light of the new situation and your mutual and separate goals.
For these and many other reasons, it is important to consult with a qualified estate planning attorney to review your estate plan periodically.
Ronald “Chip” Morrison, Jr. is a Board-Certified Specialist in Estate Planning and Administration by Louisiana Board of Legal Specialization and a member of the American Academy of Estate Planning Attorneys. He has been engaged in Louisiana trusts and estate law for the last 17 years. The firm has helped thousands of clients meet their estate planning goals and pass on lasting legacies to their loved ones. To learn more about how you can achieve your estate planning goals, please call (504) 831-2348 or visit our website at www.morrisonlawplc.com.