When life changes, your estate plan should too

As life evolves, your estate plan needs to be updated. Life events such as moving, getting a new job, marriage or divorce, having a child or grandchild, selling a major asset or experiencing a medical condition can significantly impact the administration and distribution of your estate.

Why estate plan reviews matter more than you think

Your estate plan is a living document that should evolve alongside your life journey. Events like birth, adoption, marriage, divorce or death can affect the administration or distribution of your estate. Outdated estate plans can create administrative burdens and potentially lead to outcomes that don't reflect your true intentions.

Family changes that demand estate planning attention

Growing your family

The birth or adoption of a child or grandchild may require the creation of trusts or other provisions to secure their financial future. But family growth isn't just about new arrivals. Consider these family-related triggers for estate plan reviews: 

• Birth or adoption of grandchildren: New family members may need protection and consideration in your planning
• Marriage or remarriage: Changes in marital status or blended families may require revising your will or trust to address new family dynamics
• Divorce or separation: Removing former spouses from wills, powers of attorney (POAs), beneficiary designations and updating guardianship provisions, if needed
• Death of a spouse, child or key beneficiary: Restructuring your estate beneficiaries if needed
• Changes in your children's circumstances: Marriage, divorce, financial struggles or substance abuse issues among beneficiaries
• Estrangement from family members: Adjusting provisions when relationships deteriorate 

Blended family considerations

Relationships or marriages with children from previous relationships present unique family dynamics and estate planning challenges, such as determining what assets pass to your partner/spouse versus your children and what structures to put in place, that necessitate regular review and updating.

Financial and career milestones

Selling a major asset, such as a business, or receiving a substantial inheritance can have significant tax and financial implications. Beyond these major events, consider reviewing your estate plan when you experience: 

• Job loss or significant career changes: Affecting your ability to fund trusts or maintain life insurance
• Retirement: Shifting from wealth accumulation to wealth preservation and retirement funding
• Starting or selling a business: Business interests require specialized planning strategies
• Receiving substantial gifts or inheritances: New wealth may change your planning needs
• Significant changes in asset values: Market fluctuations affecting the value of your estate
• Changes in debt levels: Major loans or debt affecting net worth calculations
• Purchasing significant assets: Real estate, valuable collector items or other major acquisitions that can have both financial and emotional value 

Health-related estate planning triggers

In cases of adverse medical diagnoses, whether for yourself or close family members, it’s essential to review your estate plan to ensure that durable that durable POAs for finances and healthcare and other critical documents are in place. Health considerations extend beyond serious diagnoses to include:

• Disability or incapacity of beneficiaries: May require special needs trusts or modified distributions
• Mental health challenges: Within your family that affect decision-making capacity
• Long-term care needs: For yourself or family members, requiring asset protection strategies
• Improvement in health conditions: Previously disabled beneficiaries who gain capacity 

Geographic and legal changes 

• Relocating to a different province: Laws may vary regarding estate planning, taxes and probate procedures. This applies to yourself, your beneficiaries and your executor(s).
• Changes in tax laws: New legislation can affect estate tax planning strategies
• Changes in philanthropic goals and interests: Updating charitable commitments may require changes to your estate plan

Relationship and administrative changes  

• Changes in relationships with executors, trustees, guardians or powers of attorney: Death, incapacity or deteriorating relationships with fiduciaries
• Changes in beneficiary circumstances: Financial responsibility or other factors affecting their ability to manage inheritances 

The administrative side: don't forget the details

Significant life events may necessitate updates to your legal documents and beneficiary designations, such as those for life insurance policies or registered accounts to ensure they reflect your current wishes. This administrative work is crucial because these assets often represent a significant part of your estate's value and may pass outside of your will and estate. If you live in Quebec, it's important to note that beneficiaries of registered accounts are designated by will only.

Reviewing the location of important documents, making an inventory list of assets and liabilities, and making a list of key contacts may be necessary to avoid complications during estate administration. It is also key to ensure your executor(s) are aware or will be made aware of where these documents are kept. Regular administrative reviews ensure your family can locate and access what they need when the time comes.

The cost of neglecting estate plan updates

Regularly updating your estate plan helps to avoid disputes. Outdated estate plans can result in:

• Unintended beneficiaries receiving assets or assets going to individuals you no longer wish to benefit
• Family disputes and litigation
• Increased taxes and administrative costs
• Inadequate protection for vulnerable family members 

Creating your estate planning review schedule

Rather than waiting for major life events, consider establishing a regular review schedule: 

• Annual check-ins for minor updates and beneficiary confirmations
• Comprehensive reviews every three-to-five years or after any significant life change
• Emergency reviews immediately following major life events 

Your estate plan is one of the most important gifts you can give your family. By staying proactive about updates and reviews, you ensure that your legacy reflects your current wishes and provides the protection your loved ones deserve. Don't let life's changes catch your estate plan off guard. Regular reviews are an investment in your family's future peace of mind.

This article was written by Matthew F. Erskine from Forbes and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.