When Should I Update My Estate Plan?

By: Robert J. Kurre, Esq.

An estate plan is dynamic in nature. A plan that was proper a few years ago (or maybe even yesterday) may no longer be appropriate. Many people assume that once they complete an estate plan, they need not do more. Unfortunately, I have seen many individuals who have outdated estate plans suffer significant financial loss. I recommend that an estate plan be revisited at least once every three years; however, an estate plan should be reviewed more frequently when changes in the law or your life circumstances dictate such a review.

Please keep in mind that no one will take a greater interest in updating your estate plan and protecting your estate from court costs, taxes and long-term care expenses than you will. For this reason, a prudent individual should be proactive in updating his or her estate plan. Let us examine some circumstances that may necessitate addressing your estate plan.

Life circumstances often dictate that an estate plan be revisited. For example, if a new marriage (or divorce) is contemplated, action is necessary to ensure that the marital partner is being treated as desired. In addition to addressing a pre-nuptial agreement (or separation agreement) and updating your Will, beneficiary designation forms for retirement accounts and life insurance policies as well as agent designations under a Health Care Proxy and Durable Power of Attorney should be re-examined. Similarly, if a child or grandchild is born, appropriate provisions should be made to ensure the child’s future by nominating a guardian as well as providing for the management of any funds which may be inherited by the minor. Additionally, if a beneficiary becomes disabled, is diagnosed with a serious illness or is suffering from deteriorating health, an estate plan should be updated to protect the disabled beneficiary’s eligibility for government benefits and make certain that ongoing decision making is in place without court involvement.

Many people are unaware of an extremely important provision which should be added to every Will – a “trigger trust”. A “trigger trust” provision in a Will can potentially protect a family’s life savings. It provides that in the event a beneficiary becomes disabled, the funds earmarked for that beneficiary will be put into a supplemental needs trust for the benefit of the disabled beneficiary. Our office drafts every Will with a “trigger trust” provision. Unfortunately, most people (and many attorneys) are not familiar with this protective measure and do not have it included as part of their estate plan. The result can be devastating as the funds inherited by the disabled beneficiary can be lost to the exorbitant costs of care for a disabled beneficiary. With the “trigger trust”, eligibility for government benefits can be maintained and the trust funds used to supplement government benefits and enhance the quality of life of the disabled beneficiary.

Changes in the law can also necessitate changes to an estate plan. For example, in June 2001, President Bush signed a new law which dramatically changed the estate tax law. As a result, the Federal and New York State estate tax thresholds are no longer at the same level. Married couples who executed their Wills prior to this change in the law may be in for a rude awakening in that New York State may be due estate taxes of tens of thousands of dollars upon the death of the first spouse due to the outdated estate tax planning provisions in their Wills. This problem can be remedied by updated Wills containing appropriate provisions.

I have given just a few examples of changes in life circumstances and the law which can lead to the necessity of updating an estate plan. To not remain diligent in updating your estate plan is to risk adverse financial consequences. A qualified elder law and estate planning attorney can analyze whether your elder law and estate planning documents currently meet the challenge of protecting your assets to the maximum extent allowed by law.