Estate planning is not a task you complete once and forget. Your estate plan needs constant attention. After all, as your life evolves, many aspects change. Your family may grow, assets fluctuate in value, or your business interests can change. If you move or own property in another state, that’s another change. With each twist and turn life offers, your estate plan should remain aligned with your current situation and future goals.
For anyone with a high net worth, this process is more than just some paperwork. It’s a strategy to preserve your legacy and make sure your wishes are honoured. Here are some crucial reasons for keeping your estate plan up to date.
Adapting to life’s twists and turns
Life’s journey brings many changes, and these developments can have a big impact on your estate plan. Let’s say you have inherited a huge family business. This new addition drastically alters your estate’s value and complexity. Estate planning adjustments can help you integrate this new asset properly so that there is fair distribution among heirs.
Similarly, the birth of a child adds a new beneficiary. The estate plan must change to include provisions for this child’s future, like education and health care.
Accommodating business changes
Any changes in your business structure or value also impact your estate plan. Let’s say your business grows and increases its value over two years. This growth can alter the percentage of your total estate tied up in your business. Without an update, your estate plan might not reflect this new proportion and may lead to a disproportionate distribution of your assets.
Also, if you enter into new partnerships and mergers or sell part of your business, these changes should be included in your estate plan. This makes sure your plan shows your current business standing accurately.
Taking care of evolving relationships
As time passes, your personal relationships might evolve. For example, you might get married, welcome new members into your family, or form new meaningful relationships. As such, reviewing and updating beneficiary designations, healthcare proxies, and power of attorney becomes paramount to reflect your current circumstances. This will make sure all your loved ones are accounted for and receive their fair share.
Aligning charitable intentions
As philanthropic interests change, so should your estate plan. Suppose initially you dedicated a portion of your estate to a specific charity. However, later, you developed a passion for different humanitarian or environmental causes. To align your estate plan with your current philanthropic interests and priorities, you need to update it.
A wealth management expert or philanthropic advisor can help you in the process. This will make sure your charitable contributions go to the causes that matter to you most, even in your absence.
Personal health is a critical factor in estate planning. If something unexpected happens to your health, having an updated plan clearly outlines your preferences for healthcare and end-of-life care. This helps your family know what you want and makes sure your health concerns are handled the way you want them to be. Without such planning, family members might face legal hurdles or conflicts. This situation can cause delays and more stress during an emotional time.
So, how often do you need to update an estate plan?
Your estate plan should grow and evolve with you. It must keep pace with life’s twists and turns, evolving wealth management strategies, current asset values, and new personal connections. It should adjust to changes in business interests, charitable intentions, and healthcare needs.
An estate plan may also include complex aspects like a last will, testament, revocable living trust, power of attorney, and more. The complexity of updating these documents grows if left for too long. So, it is advisable to make updates whenever something significant happens in your life.