An Outdated Estate Plan is a Worthless One

by Greg Lipinski

There are a number of things that can occur in a person’s life that effect your estate planning. Obviously, death is one of them; hence the purpose of this blog. In that situation, the most notable effect is the need to implement your plan. However, people might have the misconception that because they have thoroughly completely their estate planning, that everything is safe. The only thing left is to kick the bucket and have it go into effect. That couldn’t be further from the truth.

It is extremely important to update your estate planning with any major happenings in your lifetime. If you don’t, there could be a number of problems that are run into when it comes time to allocating your assets to the necessary parties. Some events might include:

• Getting married, divorced, remarried, or any other legally recognized change in relationships
• The purchase of new major assets. These might include new cars or property.
• The birth of (or discovery of) children
• Changes in laws and regulations

Essentially, any major even that occurs can have an effect. With the ones above, you are simply solidifying the fact that your new wife becomes your heir, or that your ex-wife no longer inherits. Any change in your legal status or purchase of major assets need to be allocated. It won’t be assumed that because one of your cars is going to your wife that the new car purchased a few months before your death immediately goes to her.

As for laws and regulations, changes in the economic environment might cause you to either protect or take advantage of new tax rates, rules, etc. The idea isn’t only to leave your heirs with your assets, it is to leave them with as much of the assets as Uncle Sam will allow.

Above are just a few examples of why you should constantly stay updated on your estate planning. If you’re not sure if an event in your life is worth changing your estate plan over, err on the side of caution and review it. Take a look at it and ask yourself if it has even a miniscule effect on it. If it doesn’t, then you’re in the clear. If it does, augment it as soon as possible. You never know when the worst could happen.

Resources:
http://money.cnn.com/magazines/moneymag/money101/lesson21/
http://speculationrules.com/philosophy/estateplan.php
http://www.walletpop.com/retirement/article/_a/bbdp/estate-planning-and-taxes/92726