It's a cliché to say the only constant is change. But the pace of life is undeniably fast in modern times, and a lot can happen in a short period of time.
This is why it's important to review your estate plan periodically and update it as needed. An event such as a divorce, marriage or the birth of a child may affect even the most carefully thought-out plans.
This piece will discuss when and how to review and revise your estate plan so that it continues to express your wishes, even as the specific circumstances of your life continue to evolve.
Getting Started With Estate Planning
Before outlining the process for reviewing and updating your estate plan, it's well worth taking a moment to revisit the starting point. Everyone should have a will, even though many people put it off.
The reason for having a will is pretty simple: It helps you direct who gets what property and how that will be accomplished. Wills also frequently include provisions for trusts, which are used to distribute property.
In Minnesota, it is common for an estate plan to include two other key documents besides a will. One is a durable power of attorney for financial affairs. The other is a health care directive, sometimes called a "living will."
Each of these documents plays a valuable role in its own sphere. A durable power of attorney governs situations where you may need assistance with managing your money. A health care directive enables you to specify who should make medical decisions for you, if you become unable to do so yourself. The directive also sets out the principles by which those decisions should be made.
Revising and Updating Estate Documents
Let's say you have these basic components in place. How often should your review them?
The first rule of thumb is to do it whenever a major life event occurs, such as a divorce or a remarriage. For instance, suppose a long-married couple decide to split up. If the husband remarries, does he want his property to pass to children from his first marriage? Or does he want to give everything to his new wife?
There are, of course, other possibilities. The remarried husband could put money in trust for children from the first marriage, and also create a life estate for his second wife.
This is only one example. The types of situations that prompt a review are unpredictable and can take many forms.
It should also be noted that for larger estates, tax considerations typically call for more frequent review. No matter what the size of the estate, however, it is useful to discuss the issues with an experienced estate planning lawyer.