When to Update Your Estate Plan

An estate plan is a crucial tool that helps to ensure your wishes are met after your passing. However, it’s important to understand that an estate plan is reflective of your life at the time you created it — there can be many changes that happen over time concerning your family structure and finances. In addition, new estate planning or tax laws can be enacted that might alter the effects of the original documents you created. It’s vital to know when to update your estate plan to ensure your wishes will be met when you pass away, or in the event of incapacity.

Here’s when you should update your estate plan:

1. Marriage or Remarriage

Getting married for the first time or remarrying later in life are some of the most common reasons to update your estate plan. You may want to update your will to include your spouse as the executor, as well as ensure they are listed on any beneficiary designations you have in place. Specifically, you might also wish to include your spouse on the following documents:

• Trusts
• Retirement accounts
• Life insurance policies
• Healthcare power of attorney
• Financial power of attorney

Even if you don’t want to include your spouse as a beneficiary, you should specify this to avoid any unintended consequences.

2. Divorce

While many people include their spouses in their estate plan, you should review your documents if you divorce. Although a divorce in Minnesota automatically revokes any provisions in your will that would leave property to your former spouse, there may be exceptions to this rule. For instance, if a prenuptial or postnuptial agreement was entered into that stated the automatic revocation should be disregarded, then this law would not apply. It’s best to update your will and other estate planning documents to ensure your property is distributed in accordance with your current wishes. In some cases, people remain on good terms with their former spouses and want to provide for them in their will — in these instances, your estate plan would still need to be updated to make these wishes clear.

3. Birth or Adoption of a Child or Grandchild

The birth or adoption of a child or grandchild is an especially important reason to update your estate plan, as it allows you to name a guardian and provide for the child upon your passing. You might also want to set up a trust that allows them to access funds once they have reached a certain age or life milestone. Similarly, if you did not add your child or grandchildren as a beneficiary in your will when they were born, you might want to do so when they turn 18.

4. Death of an Heir or Beneficiary

The death of an heir or beneficiary to your estate plan can impact how your assets would be distributed. Review the assets that were intended for the beneficiary and consider a new beneficiary to receive them. Be sure to look over all your documents and update your estate plan as necessary to reflect the new beneficiary designation.

5. You Received a Large Inheritance

If you have received a large inheritance, it may be time to update your estate plan. This can ensure the assets are distributed to the beneficiaries you choose — and minimize any tax implications. You might also want to consider creating trusts for the inheritance, depending on its size and complexity. This can protect the assets from creditors, reduce the tax burden, and provide instructions for beneficiaries who might not be ready to handle a significant amount of assets on their own.

6. You Acquire New Property

Acquiring new assets, such as a residential house, investment property, vacation home, or other real estate warrants an update to your estate plan to ensure those assets are included. This can also impact the tax implications regarding your estate plan, which should be carefully reviewed. As the overall value of your estate increases, it’s a good idea to make the necessary revisions to your will, beneficiary designations, and any trusts you have in place.

7. Every Few Years

Even if you haven’t had any major life or financial changes, it’s imperative to review your estate plan every few years. There may be new estate planning laws that have come into play, or your wishes might simply have changed. By setting aside time to update your estate plan every three to five years, you can ensure you have documents in place that will satisfy your wishes when you pass away.

Contact an Experienced Minnesota Estate Planning Attorney

If you have had a major life or financial change, it’s essential to update your estate plan. A knowledgeable estate planning attorney can guide you through the process and ensure your documents reflect your wishes. At Mundahl Law, we assist our clients with creating and updating estate plans that will meet their goals and provide them with peace of mind. Located in Maple Grove, Mundahl Law works with clients throughout Minnesota for a wide range of estate planning matters. To learn more about how we can assist you, or to schedule an appointment, contact Mundahl Law at 763-575-7930 or click schedule a consultation to speak with our Client Advocate.