Developing an estate plan can be a challenging task. It forces individuals to make uncomfortable decisions centered around their own mortality. For this reason, many people hurry through the process and then try to ignore the documents. Failing to update various aspects of your completed estate plan, however, is a serious error in preparation.
Avoid these three mistakes and you can keep your plan accurate and up to date.
- Failing to account for changing relationships: When you develop your estate plan, you will likely have to identify several people in the document. Not only will you be stipulating heirs, but you will also be naming guardians, trustees and those who have been given power of attorney over financial or medical decisions. If one of these people passes away, falls out of favor or decides they cannot accept the responsibility, it is crucial that you update the estate plan accordingly.
- Failing to update assets: Over the course of your life, you will likely buy vehicles, purchase property or start a business. Some people do all three of these things multiple times. When this happens, it is crucial that you update your estate plan with new assets or changed ownership. Perhaps you started a business with your brother, wrote the estate plan leaving the business to him in the event you pass away, and then have subsequently purchased his stake in the organization. It is critical that you reflect this new reality in your documents.
- Failing to include a familial change: Significant life events necessitate an update to your estate plan. In fact, many financial experts agree that a plan should be reviewed and revised every three to five years regardless. When a significant event occurs, however, you should immediately update your documents. These events can include divorce, marriage, birth of a child or death of your spouse. Do not assume your estate plan is a write-and-forget affair.
Putting together a comprehensive estate plan is a critical element to gaining peace of mind and preventing unnecessary familial disputes in the future. Do not hesitate to seek guidance when drafting or revising your estate plan.
