Once an estate plan has been made it must be actively monitored. Monitoring an estate plan can be as simple as reviewing your estate and financial documents to determine if you wish to make changes. We recommend reviewing an estate plan every five years or when a major life event occurs. A few common major life events are: marriage, divorce, death of a family member, birth/adoption of a child or grandchild, a major change in assets such as buying/selling a family business, receiving an inheritance, etc.
Estate plans that are not monitored can lead to heartbreaking consequences. Here are the top three problems we have come across when clients have outdated estate plans.
- Outdated Beneficiary Designations. Beneficiary designations are the number one overlooked item in an estate plan. Retirement accounts and life insurance contracts should be updated when major life events happen because the designation controls who receives the money, not the will or trust. This also extends to pay on death designations on a bank or brokerage account.
- Outdated Executor/Trustee. The executor/trustee of your estate plan is often a family member, friend or trusted advisor that you believe will follow your instructions. It is an important job that should be updated when a named executor/trustee passes away or your attitude toward him/her changes.
- Change in Family Attitudes or Beneficiary Responsibility. As time progresses, your relationship with your family and beneficiaries may change. Beneficiaries become adults and may be more or less responsible. Your family will grow or shrink. Your relationships may remain static but more likely some will strengthen over time while others could become estranged. Any of these shifts may change how and to whom you leave your estate.
For more information about your estate plan call LSL CPAs at 714.569.1000 or use our contact form.
Written By: Suzanne Lieber, Esq.