Estate Blunders #13 Updating Your Estate Plan Too Infrequently

The Importance of Updating Your Estate Plan Regularly

End-of-life planning is crucial, but it’s not a one-and-done task. Simply creating a will, trust, or power of attorney is not enough – you must update them regularly to ensure they reflect your current wishes and circumstances. Failure to do so can have severe consequences for you and your loved ones. This article will discuss the dangers of not updating your estate plan regularly, with two fictional examples based on Florida law, and explain how an estate planning and probate attorney can help.  

Example Outdated Beneficiary Designations

When she was single, Jane created a will ten years ago, and her estate was relatively small. She left her entire estate to her sister. Since then, Jane has married and had two children. However, she never updated her will or beneficiary designations on her life insurance policies, retirement accounts, or bank accounts. If Jane passed away today, her sister would receive her entire estate, including her life insurance and retirement accounts, even though she is no longer Jane’s intended beneficiary. This could result in her husband and children having little to no inheritance.

Example: Unintended Tax Consequences

Tom and Sarah created a trust and properly transferred ownership of their assets to the trust. However, they failed to update the beneficiary designations on their life insurance policies. After Tom passed away, Sarah received a $1 million life insurance payout. She named their children as the beneficiaries, not realizing that the payout would be subject to federal estate tax. Because the payout exceeded the federal estate tax exemption amount, their children were hit with a significant tax bill that could have been avoided if they had updated the beneficiary designations on their policies.

Changes in Life Circumstances

Life is constantly changing, and your estate plan should reflect those changes. For example, you may have divorced, remarried, had children or grandchildren, or moved to another state. Failing to update your estate plan can result in your assets being distributed in a way that does not align with your current wishes or intentions. This can cause confusion, disputes, delays, and unnecessary stress for your loved ones.

Changes in Laws

Laws related to estate planning are not static and can change frequently. These changes can affect the validity of your estate planning documents and can result in unintended consequences. For example, Florida revised its probate laws in 2011, which may have affected how your estate is managed and distributed. Failing to update your estate plan regularly can result in outdated instructions or invalid documents that do not align with current laws and regulations.

Conclusion

In conclusion, updating your estate plan regularly is crucial to ensure your assets are distributed according to your current wishes and circumstances. Failing to update your estate plan risks unintended consequences, confusion, and delays, which can cause unnecessary stress for your loved ones. Therefore, working with an experienced estate planning and probate attorney to regularly review and update your estate plan is essential. This will ensure that your final wishes are protected and ease the process for your heirs.