Have you written your will or funded any trusts? If so, you may feel that your estate planning duties have ended.
But estate planning is ongoing in nature. Once you have drafted your will and set up any trusts, you will periodically need to review these documents and update them according to your circumstances.
How will I know when I need to update my estate plans?
Your estate plans should be reviewed and assessed periodically and whenever any changes occur to your lifestyle or family composition. For instance, suppose when your children were minors you appointed custodial and fiduciary guardians for them, but the "kids" are now well into their 20s or beyond.
Or perhaps you named your former spouse as your heir and beneficiary but have since divorced and remarried. You should update your estate plan to reflect these changes and name your current spouse (if that is your choice) as your heir.
Additions to the family? Time to update
Whenever there is a birth or adoption, it is time to update any estate planning documents that you have. If this is your first child, you will need to appoint someone to assume custody of your child should you and the child's other parent pass away.
Many parents find that appointing one individual as custodial guardian of the child and another as fiduciary guardian to oversee the child's financial affairs is wise. This prevents any conflict of interest or commingling of the funds you set aside for your child's needs with the custodial guardian's finances.
You may appoint a sibling or close friend as guardian and select an outside third-party as fiduciary guardian. That person or entity will disburse funds to the custodial guardian on a set schedule or on an as-needed basis, depending upon your intentions.
Below are some specific instances in which you might need to update your will and other estate planning documents:
- A beneficiary or heir has died
- A child was born or was adopted
- There was a marriage or divorce
- There were changes or additions to California estate laws
- You moved to another state that has different estate laws
- You decide to change trustees, personal representatives or guardians
- Your children are no longer minors
- The value of your estate substantially decreased or increased
- You acquired or disposed of a significant asset
Changes for baby boomers
Many baby boomers are near or approaching the age of 70 and one-half years old. This is when you will need to take distributions of funds from a 401(k) or an IRA.
It's also a good practice to review your will and estate plan with your attorney approximately every three to five years regardless of any changes.