Almost everyone with whom I work asks me how often they should review or update their estate plan. I don’t have a definitive answer for them, and I sometime I wonder if some people think there is a secret magic formula passes among lawyers to determine the answer to this question. (Spoiler Alert: There is no secret formula) I base this hunch on the reactions I get when I say there is not a definitive time period. Many scoff, others are incredulous that I would not know something so basic (in their minds), and some even react with contempt, accusing me of trying to mislead them, or make money off ambiguity. I promise none of those reactions is correct, and none of the reasons are true.
I generally leave a decision about when to review and revise an estate plan up to my clients.
They are the individuals who know their lives best, and can determine when to update an estate plan because their life circumstances changed. I give the rule of thumb that every few years (which can range from 3 – 7, or more) is not a bad time frame to review things, and some people review their estate plan at a regular frequency, like yearly. That seems like a bit much to me, but just because I think I have built in enough flexibility to accommodate the changes life throws at you in only a year.
For most estate plans, I generally recommend a review in the time frame set out in the rule of thumb described above, or when there is a significant life event. So, what is a significant life event? That depends on how you define significant, but I think of significant as an event that would change your family circumstances, impact your financial decisions, or plan, or something that is enough to get you really engaged.
Each of these event can have a significant impact on you, both financial and otherwise, and a review of your estate plan assures your assets and legacy is passed on in accordance with your wishes as smoothly as possible.
One example, I had a client who set up a trust to fund his children’s retirement, keeping assets inside of the trust until each child turned 65 years old. Then, a few years later, the client changed their mind because their kids started saving for retirement properly. This was a great time to update an estate plan!
Of course, the big one that everyone wants to consider and lays directly at my feet is changes in federal or state laws covering estate planning, taxes, and investments
We all know that laws change all the time, and estate planning laws, tax laws, and investment laws are no exception. In December of 2017, Congress passed a significant change to tax laws. The new laws set up new opportunities, while removing, or reducing other previously available planning options. As an estate planning attorney, I look for changes in the tax law and how it may help my clients, or how it may make things easier on them. I then communicate these changes to my people, & then let them decide if it’s worth revisiting the estate plan we set up. Not every change in the law has significant impact and needs to be communicated immediately, but when there is a significant change, I communicate the change to my people.
Law Change in 2017
As an example, the 2017 tax law changed the estate tax limit from $5.6 Million per individual to $11.2 Million per individual. That particular change only affects one or two of my clients, and allows them to do something simpler. However, I did not need to send out an emergency email to all of my clients for a change that only affects less than 1% of my clients. A change in laws is a good reason to review your estate plan, but only if it affects you.