A crucial part of prudent financial planning is having a robust estate plan. An estate plan provides not just peace of mind, but also a comprehensive roadmap of how your assets will be distributed after your demise.
However, what most people overlook is that estate planning isn’t a one-and-done task. To ensure its relevancy and effectiveness, your estate plan requires regular reviews and updates. So, why is this essential? Let’s delve in.
The most apparent reason is life’s inherent unpredictability. Various life events like marriage, divorce, the birth of a child, or even the acquisition of new property can significantly alter your estate planning needs.
For example, if you have recently had a child, you would want to ensure your plan includes provisions for their future, such as appointing a guardian or setting up a trust. Neglecting to update your plan could lead to unfortunate scenarios, like your hard-earned assets ending up with unintended beneficiaries.
Laws Can Change
Additionally, laws governing estate planning change over time. For example, tax laws can be revamped, or estate laws may be modified, which could impact how your assets will be distributed.
A plan that was tax-efficient ten years ago might no longer be beneficial under today’s regulations. Therefore, staying abreast with changes in laws and updating your plan accordingly is of utmost importance.
Evolution of Financial Status
Your financial situation also evolves with time. Your net worth may grow due to new income streams or asset acquisitions. Conversely, it may decrease following a financial mishap or due to selling off assets. These fluctuations can affect the distribution of your estate, and therefore necessitate regular reviews and updates to your plan.
Finally, your plan should evolve with your goals and priorities. As you age, your preferences might change – you may want to leave more for a beloved charity, support a cause you recently became passionate about, or help a grandchild with their education. Your estate plan should reflect these shifting priorities.
Frequency of Reviews
But how frequently should you review and update your estate plan? While this depends on your personal circumstances, a good rule of thumb is to revisit your plan every three to five years. However, it’s advisable to review your plan sooner if there’s a significant life event or a considerable change in your financial status.
To sum it up, the importance of estate plan reviews and updates cannot be understated. The world around us is ever-changing, and life continues to surprise us. It’s only logical to ensure your estate plan aligns with these changes, reflects your current wishes, and stands the test of time.
Remember, estate planning isn’t just about preparing for the end; it’s about managing and protecting your hard-earned assets throughout your life. It’s about ensuring your loved ones’ financial well-being and securing their future.
To achieve this, keeping your estate plan updated and relevant is paramount. So, if it’s been a while since you last reviewed your plan, now may be a good time to dust it off and give it a fresh look. You owe it to yourself and the ones you love.
Complete Our Estate Planning Worksheet
You are on this site because you want to gain a better understanding of estate planning. You are in the right place because we have substantial resources right here, and one of them is our worksheet. This tool has been carefully prepared to convey some very important information, and you can click this link to get your copy.
We Are Here to Help!
If you have been procrastinating when it comes to estate planning or an estate plan update or review, today’s the day to put it behind you. You can set up a consultation at our Los Angeles estate planning office if you call us at 310-677-9787, and you can use our contact form to send us a message.