How Often Should You Update Your Estate Plan?: A Comprehensive Guide

16 min read

·May 9 2024

Why regular updates are necessary for your estate plan

Estate plans are living documents that must evolve as your life does. Changes in your personal life, financial status or federal and state tax law can significantly impact how your estate is handled.

While having an estate plan—which should include a Will, Trust(s), Power of Attorney and an Advanced Health Care Directive—is better than not having one at all, having an outdated plan can also create unnecessary headaches for you and your loved ones.

An estate plan outlines what you want to happen with your assets after you pass and it also includes your wishes in situations if you become incapacitated or unable to make decisions. If you’ve accumulated more assets, want to leave certain items to new people in your life or you've just changed your mind about your legacy, these are all reasons you want to update your estate plan.

Ultimately, regular updates can help prevent unnecessary disputes and inefficient asset distribution.

How often do you need to update your estate plan?

There’s no hard rule about how often you should update your estate plan, though most experts recommend reviewing your plan every two years and doing a more thorough analysis and update every five years. Ideally, your plan should really be updated anytime there’s a material change that would impact it.

With a digital estate planning solution, however, you can update as often as you need to, and each update can be made quickly and easily. You don’t have to wait years to meet with an estate attorney, but can make sure that your documents reflect any changes in your life or how you wish your estate plan to be carried out.

Still, it’s important to understand what life changes may warrant updating your estate plan so you can stay proactive and keep your estate plan up-to-date.

Those triggers can include marriage or divorce, having a child, significant financial gains or losses, or moving across state lines to name a few. Below, we dive into some of the more, and less, common reasons you may need to review and update your estate plan.

12 reasons you may want to update your estate plan

Again, any time anything changes significantly in your life, it’s usually worth revisiting your estate plan. To help clarify what those “significant changes” are, here are ten common reasons you’ll want to consider revising your estate plan:

1. You get married

When you take those vows for better or worse, richer or poorer, you change—legally and philosophically—what happens to your property. In most states, if you die, your spouse will inherit your money and possessions, either before or in combination, with any children you have. But specifically naming your spouse in your estate plan will ensure your spouse is protected when you die. As soon as you get home from the honeymoon, update your estate plan to add your spouse or to create a joint will or trust together.

2. You get divorced

As a married couple, if you’ve created joint assets or property, you’ll want to update your plan if you decide to separate. Also note that if you and your spouse have a separate will or trust, you may want to remove them as a beneficiary and update the information on any joint property that you own.

It’s also important to know that if you are planning a trial separation period—or if your state requires one before your divorce is final—you shouldn’t wait to make changes to your estate plan. If you were to die while separated, your soon-to-be ex-spouse could still be your primary beneficiary in your now-outdated plan.

3. You have or adopt a child

Adding a new family member is a momentous and joyful occasion—and may come with many sleepless nights. But make sure you update your estate plan to reflect the money and property that you want your child or children to inherit. You should also rewrite it to name a guardian who will be responsible for your children until they turn 18. If you haven’t discussed guardianship with the person you’re nominating, you may even want to name a backup in case they don’t agree.

Adopted children are generally treated the same as biological children in intestate succession laws but you’ll still want to update your documents to include them. Foster children and stepchildren whom you don’t formally adopt as your own typically don’t have any legal rights to your estate unless you specifically name them in your will or trust.

4. The death of a beneficiary, executor or named guardian

If anyone named anywhere in your estate plan dies, you’ll want to update it.

Most people leave a large chunk of their estate to a single beneficiary, usually their spouse. If they die before you, you’ll want to update your estate plan to adjust your list of beneficiaries.

In the unfortunate event that one of your children, or another one of our named heirs, passes while you’re still alive you should update your estate plan to redistribute that property to other beneficiaries.

But you’ll also want to update your plan if someone you’ve designated as an executor, beneficiary or even a guardian of your children or pets dies.

5. You’ve had a falling out with someone named in your estate plan

Ruined relationships could affect your estate planning in several ways. If there’s a big family fight and you sever ties with a sibling, you might want to specifically exclude them as a beneficiary.

Another possible reason for a change is if you’ve named someone as your executor or trustee and you no longer feel comfortable entrusting them with that responsibility. You’ll want to identify and document a new person for that role ASAP.

6. Your wealth increases significantly

Maybe you’re the lucky one to win the lottery. Or you hit it big on the stock market. Or maybe you receive a large inheritance from a family member. Whatever the reason is, if your estate suddenly becomes larger than you previously expected, you may need to update your estate plan.

You should reconsider how your wealth should be distributed after your death. That may include how much your beneficiaries are getting or the amount you're giving to charity. This is also an opportunity to do wealth transfer planning to reduce taxes at your death, like forming special trusts.

7. Your wealth is significantly reduced

If your finances are negatively impacted, you’ll want to revisit your estate plan because the distributions you’ve set up may no longer make sense. For example, if you’ve designated a certain amount to go to charity, that amount may now be the bulk of your estate and there won’t be enough left over for your other beneficiaries.

8. Moving to a new state

The laws that govern wills, trusts, and estate taxes vary by state, as do laws covering inheritance, real estate, and marital property. It’s important to make sure your estate plan is optimized for the state where you legally reside to ensure that you avoid potentially costly legal battles and to ensure that your wishes are still being met.

9. Starting or selling a business

Owning a business can present its own intricacies when it comes to estate planning, but that’s why it’s critical to update your plan. It’s important to create a succession plan for any business assets, including equity and ownership in the company.

Updating your estate plan may require coordination with your company, so it’s important to explore with an estate attorney how to approach those conversations and what needs to be discussed with the other business owners.

10. A child turning 18

Children reaching adulthood is a reason to review your estate plan. It doesn’t necessarily require updating because you may have already set up trusts to distribute assets in a certain way even after they’ve turned 18. At the same time, the need for a trust may recede and you may want to consider tax planning strategies with that adult child.

But there are other considerations for a child reaching adulthood. Perhaps you may now want to name them as a potential guardian for any younger children you have, or you want to entrust them with pets or other non-financial assets you have. And if you do decide those, that may necessitate updating other parts of your estate plan to ensure that they and your other children are set up financially.

11. Changes in federal or state tax law

While this may not happen often, it’s important to be aware of any changes in tax laws that could affect your estate plan. For example, the Tax and Jobs Act of 2017 (TCJA) nearly doubled the estate tax exemption, allowing individuals to leave more of their assets to their heirs without incurring federal estate tax. The exemption increased from about $5.49 million in 2017 to $11.18 million in 2018 for individuals, impacting decisions on asset transfers and trusts. And, currently, that law will sunset in 2025—meaning the exemption amount will be cut in half—so those that have assets over the current exemption limit may want to create strategies now.

12. You change your definition of what you want your legacy to be

It’s not uncommon that someone’s goals and wishes may change. Just as you may have had a falling out with a sibling or family member, you may have developed a closer relationship with an extended family member, like a cousin or nephew that you now want to be a part of your estate plan.

Maybe you’ve designated a portion of your estate to go to charity but your preferred charity has changed. Or you’ve adopted a new pet and want to designate a guardian should you die.

It’s possible that the decisions you laid out in your Advanced Health Care Directive have also changed. If so, you should revisit and update it. Same for any decisions you want changed about potential Power of Attorney scenarios.

People’s wishes change, and that’s OK! Just make sure those changes are reflected in your estate plan.

How digital estate planning simplifies updating estate plans

Traditionally, updating an estate plan isn’t always simple. Normally, they’d have to consult with an estate attorney to make any changes, hence the recommendation by experts to revisit every two to five years. Any updates an attorney makes can be subject to their hourly wages, as well as any discussion about those changes. Any other conversations about what changes to make and how to approach them, can also be subject to their hourly rate. Plus, you may need to wait to find time in your attorney’s schedule to do all of this.

But with a digital estate planning solution, there is no need to wait. You can login at any time and make any edits, as often as you want. If you’re having a child, you don’t need to wait until that child is born to update your beneficiary information. If you’ve moved and need to update your real estate information, you can just go ahead and do it (wealth.com’s Zillow integration will even notify financial advisors when a client has moved so they can proactively let them know to update their plan).

A digital estate planning solution makes it much easier for your estate plan to ebb and flow with the changes in your life. No longer do you have to make a plan that has barrier to revisiting and updating.

How financial advisors can help clients keep their estate plan updated

Financial advisors are uniquely positioned to help their clients ensure their estate plans are kept up-to-date because they’re already involved in overseeing their finances. While clients may not actively offer up that they’ve had a falling out with a sibling or that they’ve adopted a new pet, advisors will likely know if they’ve gained or lost a significant amount of money. But, even for those life changes that are more difficult to talk about, advisors can help uncover reasons their clients’ estate plans should be revisited.

Here are some actionable tips for financial advisors to help keep their clients’ estate plans up-to-date:

Schedule regular reviews: This can be as simple as incorporating estate planning into your quarterly or annual client reviews. While some reasons may be obvious, like moving to a new state, some, like family squabbles, may not be. Ask the right questions, like if they’ve had any significant financial changes or if they’ve come into possession of any non-financial assets they want passed down to their children. But it’s also worth doing a thorough review of their estate plan at certain points. This doesn’t have to happen at every review, but going through the details of the estate plan may help the client to offer up information they may not otherwise, like the person they named as executor has died or that they want to add a new family member as a beneficiary. Often, it’s not that your client doesn’t want to share this information, it’s just that they don’t think to share it. With regular reviews, you can help them stay on top of their legacy.
Keep documentation updated: Documentation is paramount! So make sure that you help your clients maintain all necessary records that could impact their estate plans, like deeds for properties and financial statements. Also make sure to keep all information about beneficiaries, trustees and executors up-to-date.
Stay informed about law changes: Keep yourself informed about changes in laws that could impact your client’s estate plan. Subscribe to newsletters or podcasts—wealth.com’s The Practical Planner podcast is certainly one we recommend. However you prefer to stay on top of legal and tax news, your clients are looking to you to be informed. Doing so will only strengthen the relationship you have with your clients.

If you want to dive deeper into when an estate plan should be updated, check out The Practical Planner podcast episode, “When to Update an Estate Plan" hosted by Anne Rhodes, wealth.com's Chief Legal Officer, and Thomas Kopelman, wealth.com's Head of Community and Co-founder of AllStreet Wealth.

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