This year, we’re inviting a handful of our most trusted colleagues to share their ideas and expertise on topics of interest to our clients. Mark and I are “drive the car until the wheels fall off” people as illustrated by my 2009 Volvo and his 2010 Subaru. The only way for this strategy to work is to ensure that we’re caring for the cars and servicing them on a regular basis, even when everything seems to be running smoothly. That got me to thinking about another “vehicle” that we “buy” and then “drive” forever—our estate documents. They, too, need periodic attention to ensure that over the years, they continue to serve us as well as the day we created them. Monica Goel, our guest writer and an experienced estate attorney, has guidance for when and how we should maintain our estate plans. We love her suggestions and you can count on us checking under the hood with you!
If you own a car, then you know it requires regular servicing in order to perform well and be reliable. More than likely, your car came with a recommended schedule for service, based on how many miles it has been driven; after a certain number of miles, you need to change the oil, replace the brake pads, rotate the tires, and so on.
If you have a newer car, you probably have an irritating dash light that comes on when it’s time for service and stays on until the mechanic resets it. Either way, whether you pay attention to the odometer or rely on that dash light, it’s pretty easy to know when it’s time to service your car. And if you keep driving it without servicing it, it’s a sure bet your car will let you down.
Like your car, your estate plan needs “servicing” if it is going to perform the way you want when you need it. Your estate plan is a snapshot of you, your family, your assets and the tax laws in effect at the time it was created. All of these change over time, and so should your plan. It is unreasonable to expect the simple will written when you were a newlywed to be effective now that you have a growing family, or now that you are divorced from your spouse, or now that you are retired and have an ever-increasing swarm of grandchildren! Over the course of your lifetime, your estate plan will need check-ups, maintenance, tweaking, maybe even replacing.
So, how do you know when it’s time to give your estate plan a check-up? Well, instead of having mileage checkpoints, your estate plan has event checkpoints. Generally, any change in your personal, family, financial or health situation, or a change in the tax laws, could prompt a change in your estate plan. Use the following list to guide you.
It’s a good idea to review your estate plan every year. Set aside a specific time every year (your birthday, anniversary, family gathering) to review it.
Event Checkpoints for Your Estate Plan
- You marry, divorce or separate
- Your or your spouse’s health declines
- Your spouse dies
- Value of assets changes dramatically
- Change in business interests
- You buy real estate in another state
- Birth or adoption
- Marriage or divorce
- Finances change
- Parent or relative becomes dependent on you
- Minor becomes adult
- Attitude toward you changes
- Health declines
- Family member dies
- Federal or state tax laws change
- You plan to move to a different state
- Your successor trustee, guardian or administrator moves, becomes ill, changes mind
- You change your mind
These checkpoints may not be as regularly scheduled as your 30,000 or 60,000 miles checkup for your car but they still warrant periodic monitoring to ensure that your estate plans are running like a finely-tuned machine. Best practice is to check in with your estate attorney or financial planner at least every year or so to ensure everything is humming along.
Making it possible for clients to preserve their wealth, avoid probate, tackle incapacity, and trust administration.
Inspired Financial empowers clients – primarily women and families – to feel comfortable managing their financial lives, especially during and after times of significant change. We stand with and educate clients during all life stages, instilling in them financial peace of mind, and allowing them to live a simple and elegant life. Caring for clients as if they were family – that’s what Inspired Financial advice is all about.