Here is a truth about estate planning: even a solid plan that covers every item can become worthless if it’s not regularly updated.
Estate planning is not a “one-and-done” task. It is a dynamic process that must evolve with your life. No matter who you are, your life will change: families grow and shrink, laws are amended, assets are bought and sold, and your personal goals shift. An outdated plan can cause the very family disputes, tax burdens, and probate issues you were trying to avoid. Imagine your assets being frozen in probate court for months, or a new child being unintentionally left out of your will. This is the reality of a “stale” plan.
This is why we’re reframing the “checklist.” It’s not just a list of documents to create once, but a guide for what you must review regularly. An up-to-date plan is the most powerful tool in estate planning, ensuring your wishes—not the state’s default rules—are carried out.
In the absence of major life events, we recommend reviewing your plan each year. At a minimum, it should be thoroughly reviewed every three years with an experienced attorney who can spot issues you might miss.
Immediate Triggers: When to Update Your Estate Plan
Certain life events are so significant that they require an immediate call to your estate planning attorney. If any of the following occur, your plan may be dangerously out of date.
1. Changes in Your Family
- You Get Married: Marriage changes your legal status. You’ll likely want to name your new spouse as a beneficiary, grant them medical or financial power of attorney, and add them to your will or trust. How this interacts with any prenuptial agreement is also a critical conversation.
- You Get Divorced: This is one of the most critical times to update. You must ensure your ex-spouse is no longer eligible to receive assets or make decisions on your behalf (unless that is your wish). Failing to do so could mean your ex-spouse makes life-or-death medical decisions for you.
- You Give Birth or Adopt: Welcoming a new child requires you to name legal guardians (both short-term and long-term) and add them as beneficiaries. A trust is often essential to manage their inheritance until they are mature, preventing them from receiving a large sum of money at age 18.
- A Loved One Dies: If a beneficiary, executor, or guardian named in your plan passes away, you must update your documents to fill the gap their absence creates. This means naming new individuals or updating contingent (backup) beneficiaries.
2. Significant Life or Location Changes
- You Get Seriously Ill or Injured: A major health diagnosis may change your perspective on your quality of life, who you want making healthcare decisions for you, and what those decisions should be. Your directives should reflect your most current wishes.
- You Relocate to a New State: Estate planning laws vary widely from state to state, especially regarding community property or the specific language required for healthcare directives. Moving requires a review to ensure your plan is legally compliant in your new home.
3. Major Financial or Business Changes
- Your Assets Change Significantly: If your estate’s value dramatically increases (like an inheritance or stock options) or decreases, your plan must be adjusted. Your tax situation may change, or the way you’ve divided assets may no longer be fair or feasible.
- You Buy or Sell a Business: This is a major event. Selling a business requires proactive planning to manage capital gains taxes. Buying a business necessitates a clear business succession plan—like a buy-sell agreement—to protect both the company and your family.
The Core Components: Your Estate Planning Checklist
Whether you are creating your first plan or reviewing an existing one, these are the critical components that must be in place and up to date.
1. Create or Update Your Will
Your Last Will and Testament is the foundation. This legal document outlines who receives your property, names beneficiaries, appoints an executor (and a backup executor) to manage your estate, and names guardians for minor children. While online templates exist, consulting a lawyer ensures your will is properly formatted and legally binding, safeguarding against challenges.
2. Establish or Review a Living Trust
A living trust is a powerful tool that allows you to place assets into a trust you control while alive. Upon your death, those assets are distributed directly to your beneficiaries, avoiding the public, costly, and time-consuming probate process. Trusts are especially vital for managing assets for beneficiaries, complex family dynamics, or protecting loved ones with special needs.
3. Designate Your Powers of Attorney
Who do you trust to manage your affairs if you cannot?
- Durable Power of Attorney (Financial): This grants a trusted person (your “agent”) the authority to manage your financial and legal matters (like paying bills or selling property) if you become incapacitated and unable to make decisions.
- Power of Attorney (Healthcare): This designates a healthcare proxy to make medical decisions on your behalf if you are unable to communicate your wishes.
4. Prepare Healthcare Directives (Living Will)
This document, also known as an advance healthcare directive, states your medical preferences. It outlines your wishes regarding resuscitation (DNR), life support, feeding tubes, and other critical care, ensuring your medical treatment aligns with your values and removing this agonizing burden from your family.
5. Review All Beneficiary Designations
This is a critical, often-overlooked step. Beneficiary designations on accounts like 401(k)s, IRAs, and life insurance policies supersede your will. If your will says everything goes to your spouse, but your ex-spouse is still named on your life insurance policy, your ex-spouse will get the money. This is not an exaggeration; it’s a common and tragic mistake.
6. Inventory Your Assets and Debts
Create a comprehensive inventory of all your financial accounts, real estate, personal property, and debts. This clear financial overview is invaluable for your executor. This list must also include your “digital assets” like social media accounts, online passwords, and cryptocurrency, along with instructions on how to access them.
7. Organize and Secure Key Documents
Your executor and family members must be able to find your documents. Store your will, trust, POAs, and healthcare directives in a secure, accessible location—such as a home safe, safe-deposit box, or secure digital vault. Inform your executor and trusted family members of the location and how to gain access.
8. Plan Your Funeral Arrangements
Planning your funeral or memorial service in advance can relieve a significant financial and emotional burden from your family. You can specify burial or cremation, desired music or readings, and even prepay for services. This allows your family to grieve without the stress of making major financial decisions under duress.
9. Communicate Your Plan
While the financial details can remain private, communicating the existence of your plan is vital. Key family members and fiduciaries should know who is in charge (the executor, the POA) and where to find the documents. This open dialogue ensures your intentions are understood and respected, preventing confusion and conflict.
The Horizon Law Difference: A Plan That Lasts
Outside of not creating any estate plan at all, the most common mistake we see is a plan that no longer works because it’s outdated. Unfortunately, once you become incapacitated or pass away, it’s too late. Your loved ones are forced to deal with the consequences.
Hiring an estate planning attorney provides peace of mind that your plan is comprehensive, legally compliant, and customized to your unique needs.
At Horizon Law, our services go far beyond simply creating documents. We develop a relationship with you and your family that lasts. We’ve created proprietary systems designed to ensure your plan is regularly reviewed and updated. This means we are actively tracking changes in the law and reaching out to you, ensuring your plan never becomes “stale.”
We emphasize complete transparency and offer a range of services, including:
- Wills, Trusts, and Estate Tax Planning
- Durable Powers of Attorney
- Healthcare Directives
- Guardianship Designations
- Asset Protection Strategies
- Special Needs Estate Planning
As your estate planning lawyers, we are here to serve your entire family. We take the time to get to know you and your loved ones, which can include facilitating family meetings to explain your wishes. This ensures everyone understands your plan and knows exactly what to do when the time comes.
Don’t leave your family with an outdated plan. Contact us today to schedule a consultation and ensure your legacy is protected.
