When to Review an Estate Plan
When to Review an Estate Plan
How often should someone review their estate plan with an estate planning attorney? Generally, the rule of thumb is every two to five years, assuming all else remains constant. However, as the old saying goes, “Life is that thing that happens to you on the way to fulfilling your plans”. Some of the changes life can throw your way are good, others are bad, and some are just changes. Regardless, each of these might affect an estate plan and necessitate a review and possible changes. I’ve listed seven life changes below, although this list is certainly not exhaustive.
1. Children, Grandchildren and Other Dependents
Children and grandchildren, as the saying goes, are a blessing. They do, however, come with a multitude of decisions and life changes. Where once a couple could simply act in a carefree manner, the birth of a child will necessarily change this. Parents will need to set up a trust and appoint a guardian, at minimum. Other changes might be required as well.
The same can be true of grandchildren. Where previously an estate plan might have designated only surviving adult children, the arrival of grandchildren might require a review of estate documents in order to permit the grandparents to make special provisions for their grandchildren. This may be especially true in cases where something has happened to the parents so the grandparents need to raise the grandchildren themselves. Estate documents written to account for elder settlors and adult children may now need to plan for minor children in ways that will account for the parents’ possible absence.
Also, there might arise situations where an adult child must be cared for as a result of injury or disease. This would likely necessitate a complete review of an estate plan, including healthcare directives, the establishment of a special needs trust and possibly a Medicaid trust as well.
2. Divorce
Possibly the most common reason, though, is divorce. This applies in all circumstances, but perhaps even more strongly in cases of an amicable divorce. I know of someone who upon review of his estate plan discovered that his ex-wife was still listed as the beneficiary of his largest insurance policy, years after their divorce. As his divorce was amicable, he really just didn’t think too much about it at the time.
A spouse plays a large role in any estate plan, partly out of love and partly out of the requirements of Florida law. A well-drafted plan will necessarily account for a spouse’s outsized role in the settlor’s life. Divorce, however, changes everything. An updated plan will necessarily take divorce into consideration and may require naming new trustees and personal representatives, at minimum. It may also require the establishment of a trust for any minor children, designating new beneficiaries and other modifications as well.
3. Life-Altering Disability or Diagnosis
Sadly, car crashes, serious falls, sports injuries or disease all may cause life-altering changes, including the possibility of a shortened lifespan. Everyone has had those incidents where a nearly fatal encounter with another car was avoided at the last minute by quick action or merely by fate. Many also know of someone whose serious disease was diagnosed just in time thereby averting more negative consequences. On occasion, however, fate might not be so kind.
In these situations, it becomes imperative to review an estate plan, especially with an eye toward long-term care, healthcare proxies, possible Medicaid planning and arrangements for minor children. Note, Medicaid has significant spend-down provisions that proper estate planning may ameliorate or even avoid.
4. Death or Disability of One Spouse
As stated above, partly out of love and partly out of the requirements of Florida law a spouse plays a large role in an estate plan. Thus, the death of a spouse will necessitate a review of any estate plan. A new personal representative and healthcare surrogate might be required for the settlor as well as the selection of or reapportionment of assets for beneficiaries.
There also may be a need to distribute certain assets to a deceased spouse’s beneficiaries following that spouse’s death. As a result, a change may be required in order to exclude those same beneficiaries from a future share of the surviving spouse’s estate.
Further, cases of a spouses’ incapacitation or disability may require long-term care planning, Medicaid planning and the preparation of a Florida special needs trust.
5. Adult Child Facing Addiction
Self-destructive behaviors such as substance abuse and gambling addiction are sadly too commonplace. If an adult child develops these problems, instead of directly bequeathing an inheritance it might be prudent to enact trust options that would safeguard the adult child’s assets and inheritance from the adult child’s own negative tendencies.
6. New Florida Resident
Florida is nearly unique in the protections it offers homestead property, including the protection against alienation afforded non-titled spouses. Moreover, after a relocation the trustees and personal representatives listed in existing estate plans might reside across the country and thus make administration difficult or perhaps impossible. New residents should certainly consult with an estate planning attorney shortly after establishing legal residence in the Florida.
7. New Business Ventures or New Partners
Finally, the advent of newly established businesses or the accession of new business partners may be grounds for a re-evaluation, including business succession plans and key person insurance. A review of an estate plan would certainly be in order.
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