Why Your Estate Plan Should be Regularly Reviewed

You already completed your estate plan so you are one step ahead. But did you know that your estate plan will likely need to be revised at least once after the initial creation? There are several reasons why an estate plan should be reviewed. First, your personal circumstances and family dynamics may have changed since your last review, which could impact the effectiveness of your current plan. Second, laws and tax regulations can change over time, which may affect the distribution of your assets and the tax implications for your beneficiaries. Regular reviews can ensure that your plan is up to date and aligned with your current goals and objectives. It is also a good idea to review your estate plan with your legal and financial advisor to make sure that your assets are distributed in the most efficient and tax-advantaged way possible. Overall, regular reviews ensure that your estate plan reflects your current wishes and is legally and financially sound. 

Changes in Personal Circumstances 

Much like life changes, your estate plan needs to change along with it because what your estate plan says is what goes. If you no longer have a positive relationship with a designated trustee or beneficiary, but you don’t properly amend your Trust, that Trustee will still be the one in charge and that beneficiary will still receive their share. 

Additionally, if your trustees pre-decease you and your estate plan is not updated, then your estate will end up in probate court to determine who will take the role as trustee. If your agents on healthcare directives and financial powers of attorney pre-decease you, then your loved ones will be in court to obtain a conservatorship to care for you. 

Changes in assets can also have a significant impact on your estate plan, and it is important to update your plan accordingly. For example, if you sell or acquire new assets, such as property or investments, it is important to include them in your estate plan so that they are distributed according to your wishes. 

Change in Federal and State Laws

Estate tax laws and regulations can change over time, and these changes can have a significant impact on your estate plan. For example, changes to the federal estate tax exclusion amount, which is the amount of money that can be passed on to your beneficiaries free of federal estate taxes, can affect the distribution of your assets and the tax implications for your beneficiaries. 

Your estate plan should consider any potential future changes in estate tax laws and regulations. The 2022 estate tax limit for an individual is approximately $12 million and for married couples it is approximately $25 million. This means that an individual’s estate will not be assessed an estate tax if their estate is valued at less than $12 million when they die. Estate Tax can be upwards of 40%. However, these estate tax limits are set to sunset in 2026 which could require amendments for many joint trusts as well as potential advanced planning for individuals and married couples. 

Changes in other tax laws can affect your estate plan as well. For example, the passing of California State Proposition 19, effective in 2021, had a large effect on the inheritance of real estate between parents and children and grandparents and grandchildren. This caused many people to rethink the distribution of their assets. 

Unwanted Consequences of Handwritten Amendments

Although it can be tempting to make handwritten changes to your estate plan, the consequences can be devastating such as litigation which is costly and time-consuming to your estate. Recently, Priscilla Presley filed a petition in probate court contesting the validity of an alleged amendment to her late daughter, Lisa Marie Presley’s, Trust. Priscilla’s petition is partially based on claims of fraudulently constructed, hand-made inconsistency in signatures, alleged editing of a PDF document to change dates, and inconsistency with the Trust document’s requirements for amendments. 

All trusts, if properly written, have provisions on the accepted method of amendment to that Trust. Almost none allow for handwritten amendments. Further, even if you meant your changes and there was no fraud involved, DIY edits leave your estate open to litigation. 

Overall, it’s important to regularly review and update your estate plan to reflect changes in your assets, beneficiaries, and personal circumstances. By doing so, you can ensure that your assets are distributed according to your wishes, and that your estate plan is legally and financially sound.

As a boutique firm, we can provide each client with a truly personalized experience in the estate-planning process. Contact us at 424-242-5021 for a free consultation. 

Nothing in this article should be construed as legal advice. For specific guidance regarding your situation, please contact an attorney.