7 Reasons Why its Time to Review Your Estate Plan
All too often, clients who have executed estate plans don’t recognize the importance of reviewing their documents from time to time. Unfortunately, in some instances, your loved one may no longer be able to revise his or her will or trust. Regular reviews – and the decision to update an estate plan when circumstances change – are critical to ensuring your intentions are honored.
Ability to Update an Estate Plan
In order to revise your estate plan, you must have the requisite mental capacity at that time. As a result, if you no longer have “testamentary capacity,” changes can’t be made to your will or trust. This is one of the most important reasons to proactively update your estate plan before issues arise.
A person has testamentary capacity if, at the time of making any changes to his or her will or trust, they understand the nature of the act of making a testamentary disposition, the nature and situation of their property, and their relationship to the persons who have claims upon their bounty and will be affected by the document.
Durable powers of attorney are considered a contract between the principal and their agent and require an even higher level of capacity and, as a result, you may be precluded from revising these documents in the future if capacity is lost.
Why Periodic Estate Plan Reviews and Updates Matter
Things change. On June 25, 1963, John F. Kennedy stated that “change is the law of life, and those who look only to the past or present are certain to miss the future.” This explanation is precisely the reason that periodic review of your estate plan is so important. In many cases, failing to update an estate plan after major life events can lead to unintended outcomes.
In the event of a serious illness that renders you incapacitated, it may be too late to complete changes to your plan.
While there are many important reasons to review your estate plan from time to time, here’s an overview of seven reasons to do so:
1. Beneficiaries
Benjamin Franklin’s son, William Franklin, supported the British before and during the Revolutionary War. William moved to England in 1782, never to return to America. Both actions resulted in Franklin substantially disinheriting his only living son.
Have events occurred that affect how you desire to distribute your estate? It may be time to consider whether you want to alter your distributions to exclude a beneficiary or, alternatively, whether it is appropriate to now include a loved one that you may have been previously estranged from. These changes often require a formal decision to update your estate plan to reflect your current wishes.
2. Assets and/or Income
Your assets and/or income may have significantly changed since you originally executed your estate plan. Hopefully, your financial situation has improved significantly (the lottery, an inheritance, or just commonsense savings), and you may now want to consider the inclusion of charitable beneficiaries that previously may not have been feasible – another common reason to update an estate plan.
3. Marital Status
A change in marital status is almost always an appropriate time to consider your estate plan reviews and updates. Under Nevada law, a divorce does not automatically revoke estate planning documents.
However, to the extent that there are any distributions provided to a former spouse, those provisions will be treated as if the spouse predeceased you, and he or she will receive nothing from your estate plan.
In the event you have young children and any distributions are to be held in trust for their benefit, it is important to review the estate plan to provide an alternative successor trustee if you’re not comfortable with your former spouse serving in that capacity.
4. Illness or Disability
In the event you suffered from a serious illness or disability since the original execution of your estate plan, your documents should be renewed. Careful consideration should be made regarding your designations pertaining to life-sustaining treatment, designation of your health care agent, and limitations, if any, upon the authority of the agent.
More importantly, statutory durable powers of attorney now include statements regarding living arrangements in the event of incapacity. If your durable power of attorney for healthcare decisions doesn’t specifically authorize your agent to transfer you to an assisted living or skilled nursing care facility, these tasks may not be completed without time-consuming and expensive guardianship proceedings– making it especially important to update your estate plan proactively.
5. Nominations for Successor Trustee, Personal Representative, or Agent
The use of a revocable living trust is an excellent way to avoid the time and expense of probate. However, court intervention may be necessary if you fail to periodically review your documents and, upon your passing, it is discovered that the person nominated to serve as successor trustee has predeceased you or is unable to serve.
This issue can easily be avoided when clients routinely update their estate plan and confirm that all nominations remain appropriate. The same applies to nominations in your will and durable powers of attorney.
6. Dispositions of Remains
Gene Roddenberry (the creator of the original Star Trek) asked that his ashes be scattered in space. That request was fulfilled on April 21, 1997, when his ashes and those of 24 other people, including Timothy Leary, were launched into orbit on a Pegasus rocket provided by Celestis, Inc.
In many instances, when individuals initially execute estate planning documents, they have no specific intention regarding the disposition of their remains. If your wishes have changed, your estate plan should be updated to reflect those desires clearly.
7. Disposition of Personal Property
Robin Williams did an excellent job of planning his estate, but the February 3, 2015, New York Times reported conflict between his widow and children regarding his cherished personal belongings.
A will or trust may refer to a written statement or list to dispose of items of tangible personal property not otherwise specifically disposed of by the document. While this option is often overlooked, failing to plan – or failing to update an estate plan to include such instructions- can lead to unnecessary family conflict.
Estate planning documents shouldn’t be put away and forgotten. Regular review—and the decision to update your estate plan as life evolves -is essential to ensuring that your goals are properly addressed and your loved ones are protected. An experienced estate planning attorney should be consulted to assist with this process and provide peace of mind.
Whether you would like to start estate planning today or need to review and change your estate plan, contact an estate planning lawyer in Las Vegas for your needs.
For more than 30 years, Attorney Lee A. Drizin has practiced in the areas of estate planning, probate, trusts, guardianship, and real estate matters representing clients throughout the state of Nevada.
Drizin Law is providing this information for educational purposes only. It should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. This information is based on general principles of Nevada law at the time it was created and you should be aware laws frequently change. Moreover, the laws affecting you may differ depending on the circumstances. You should consult with a qualified attorney in your own state or jurisdiction concerning your particular situation. Review of this information does not create an attorney-client relationship.
