The Importance of Regular Estate Plan Reviews and Updates
The best estate plans in Pennsylvania are constantly evolving. Although many residents assume that the estate planning process is over once they create a Will or a Trust, they must review their circumstances on a regular basis to pursue optimal results. After all, your financial situation can change drastically within just a few months. Although there are some steps you can take to “automatically” protect these assets after creating an initial estate plan, this process is not foolproof. With regular updates, you can save your family from taxation, time-consuming litigation, and plenty of stress. Why should you update your estate plan in Pennsylvania?
Regular Estate Plan Updates Can Help Your Family Avoid Intestate Succession
One of the key reasons to update your estate plan is to avoid intestate succession. This process is probably the “worst-case scenario” for most beneficiaries. It is time-consuming, expensive, and completely unpredictable. In simple terms, intestate succession is the process that the probate court follows to distribute assets to beneficiaries without instructions left in a Will. This process is quite random, and there is no real way to predict who will receive what. Generally speaking, spouses and children of the decedent inherit assets first – potentially in a way that totally goes against what you would have wanted.
But why might an outdated estate plan lead to this scenario? Let’s say you wrote your Last Will and Testament at a time when you held various stocks, bonds, and real estate holdings. What happens if a decade passes, and you no longer hold these assets in your portfolio? What happens if you sell your real estate holdings and put them into new stocks? What if you sold all of your stocks and moved to cryptocurrencies instead? When probate courts read your will, they will see instructions to distribute assets that no longer exist. As such, they will have no choice but to follow the rules of intestate succession when distributing the assets that do exist.
How Often Should I Review My Estate Plan in Pennsylvania?
Assuming that there are no major changes in your life, you might want to review your estate plan every three to five years. A review of your estate plan is a very easy process, and it should not take very long when you work alongside a qualified estate planning attorney in Pennsylvania. The main goal is to take a close look at your financial situation to ensure that your current Will accurately reflects these economic circumstances. Your lawyer will keep a close eye out for new financial changes that require adjustments to your Will. If there are no adjustments needed, you can continue for another few years before revisiting your situation.
What Kind of Major Life Changes Require Estate Planning Changes?
Note that you may need to review your estate plan more often if you experience certain life changes. The “three-to-five-year rule” only really applies to periods of minimal change. So, what kind of life changes might necessitate an adjustment or review of your estate plan? Here are a few examples:
- New Children: If you welcome new children into your family, you may need to adjust your estate plan. You may feel that your new child deserves to inherit assets just like the rest of your children. On the other hand, this may be your first child. As such, you may decide to add them as a beneficiary – and perhaps remove other beneficiaries. For example, you may have identified a niece or nephew as a beneficiary. But with a child of your own, you may feel that your own offspring should inherit the assets instead.
- Divorces: A divorce in Pennsylvania is an obvious reason to adjust an estate plan. Your ex may be a major beneficiary, and you may need to manually adjust all of your estate planning documents to reflect these new changes. It is best to adjust your estate plan as soon as possible, and you may not need to wait until the divorce is finalized. To approach this situation in the most effective manner, it makes sense to get advice from a qualified estate planning lawyer.
- Increases in Wealth: Increases in wealth may necessitate adjustments to your estate plan. For example, you might win the lottery. You might become very successful in your investments. Perhaps you received lucrative stock options through your employer. Whatever the case may be, new wealth may not be accounted for in your existing estate plan.
- Decreases in Wealth: Of course, decreases in wealth may also necessitate changes. If your business went bankrupt or you fell on hard times, you may need to move toward a more affordable estate plan that reflects your lower wealth.
- Certain Medical Diagnoses: Remember, estate planning is not just about assets. You might also consider an adjustment if you believe that a medical issue could leave you incapacitated in the near future. Guardianships, powers of attorney, and medical directives can all help in this situation.
Can I Avoid Constantly Updating My Estate Plan?
Yes, there are certain strategies you can employ to avoid constant updates to your will. One popular choice is combining a living trust and a pour-over will. A living trust allows you to transfer assets into a trust while you are still alive. This allows you to enjoy your assets while simultaneously setting the groundwork for streamlined inheritance after you pass.
A pour-over will augment this strategy by ensuring that all additional assets outside of the trust are simply transferred into the trust at the time of your death. In other words, any unexpected new assets you accumulate in the future will not require updates to your estate plan. Instead, you can rely on your pour-over will to “pour” these new assets into your living trust. Aside from eliminating the need for constant updates, this strategy can also help your family avoid intestate succession for assets not specifically mentioned in your Will.
Find a Qualified Estate Planning Lawyer in Pennsylvania
If you have been searching for an experienced estate planning lawyer in Pennsylvania, look no further than NBMS Law, P.C. Updating your estate plan should be a relatively streamlined process – but even a few hours of effort can lead to serious benefits for you and your beneficiaries. That being said, different people may need to update their estate plans in different ways. The logical approach is to discuss your unique circumstances during a consultation. From there, we can guide you toward the estate planning updates for long-term financial security.