Some estate planning clients change their estate planning frequently as they get older. Estate attorneys suggest reviewing and updating your will every four to five years, or after experiencing a significant life event, to ensure it remains up-to-date. Usually this stems from excessive worry over what will happen when they are gone.
Here are some of the most common reasons to update your estate plan:
Reason #1: Changes in Your Family Structure
Life’s biggest milestones are often the most critical triggers for an estate plan review. This includes events like a marriage, divorce, the birth or adoption of a child, or the death of a loved one. A new marriage means you have a new legal heir, while a divorce may not automatically disinherit a former spouse without a specific update. The arrival of a new child necessitates naming a guardian and including them as a beneficiary. Similarly, if a named beneficiary passes away, you will need to redirect their intended inheritance.
Reason #2: Significant Changes to Your Finances
Your financial situation is rarely static. If you acquire or sell a major asset, such as a business, a home, or a valuable collection, your estate plan must be updated to reflect this. The same is true for major shifts in your financial standing, like receiving a large inheritance, winning the lottery, or transitioning into retirement. Without updates, new assets may not be distributed according to your wishes, and the plan may not be structured in the most tax-efficient way.
Reason #3: A Move to a New State or Changes in the Law
Estate planning laws are not universal; they vary significantly from state to state. If you move, your California-based will or trust may have provisions that are invalid or interpreted differently under your new state’s laws. Furthermore, tax laws at both the federal and state level change over time. An outdated plan might not take advantage of new tax-saving strategies or, worse, could result in an unexpectedly large tax burden on your estate.
Reason #4: Shifts in Your Personal Priorities or Health
As your life progresses, your values and wishes may change. You might develop a passion for a specific charity and wish to include it in your estate plan through legacy giving. A significant health diagnosis could also prompt a review, not only to confirm your inheritance wishes but also to ensure you have durable powers of attorney and advance healthcare directives in place. It’s also common for relationships to evolve, leading you to change who you’ve chosen as beneficiaries, executors, or trustees.
A Word of Caution: Preventing Challenges to Your Updated Plan
While there are many valid reasons to update your will or trust, it is crucial for elders to exercise caution, particularly when altering beneficiaries or reducing the amount they will receive.
A beneficiary who has been disinherited or has had their share reduced may file a lawsuit (called a “will contest” or “trust contest”) after your death. They may claim you were not mentally competent or were unduly influenced by another person when you made the changes. This can result in costly, time-consuming, and emotionally draining litigation for the other beneficiaries of your estate.
Proactive Steps to Safeguard Your Wishes
While there is nothing anyone can do to prevent a disgruntled former beneficiary from filing a lawsuit, there are powerful steps you can take during your life to create a formidable defense against a future contest:
- Work with an Experienced Attorney. Rather than utilizing do-it-yourself forms or online services, elders seeking to make significant changes to their estate plan should always consult with an attorney. An attorney serves as a professional, impartial witness to your wishes and ensures the documents are legally sound.
- Confirm Your Mental Capacity. Consider asking your primary care physician to perform a mental capacity evaluation around the time you update your plan. A letter or report from the physician establishing your competence can be one of the strongest pieces of evidence to defeat a claim of incapacity.
- Get a Second Opinion. To ensure that their estate planning accurately reflects their true intentions, elders who have created plans favoring non-relatives or making other significant changes should consider obtaining an estate plan review from a second, independent attorney.
These steps ensure that impartial witnesses will be able to testify as to the elder’s mental capacity, creating a formidable defense against a will or trust contest.
Our Northern California attorneys, located in the Walnut Creek/Danville area of the East Bay, are available to assist clients interested in how to create or update an estate plan. Contact us today!
