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Why Does My Estate Plan Need to be Reviewed?

Tax laws change, so do lives. You could be missing out on planning opportunities, or forget to make an important change that cannot be fixed after you pass.

Creating an estate plan entails a detailed review of every aspect of your life, from personal finances to personal relationships. Sometimes that brings issues to light that are difficult to deal with, but need to be addressed.

The Smyrna-Clayton Sun-Times reports in its article, “Change plan as plans change,” that most financial plans begin as a snapshot of your financial life, with a thorough review of your assets, liabilities, and cash flow.

Your estate planning attorney will then use this to show what your financial life may look like, under a wide range of future scenarios. However, when it comes to forecasting numbers and assumptions, it’s not uncommon for things to turn out differently than planned. You need to recalibrate your planning based on your situation, as well as where the markets and your circumstances are heading.

For example, most people set their 401(k) allocations and name beneficiaries when enrolling in the plan and never look at it again. This also happens with life, property and casualty insurance policies. The renewal notices arrive in the mail when your policy is renewed, but do you actually read them?

You should review every property and casualty renewal to be sure your coverage selections are adequate. Don’t assume that the renewal has the same exact coverage as last year, or that it was the right amount of coverage. Review your beneficiary designations every time you pay your life insurance bill.

In the same fashion, estate plans are rarely reviewed yearly. However, there are parts of your estate plan that may be worthless, if they’re too old. There may also be new opportunities that you are missing.

Every few years, your health care power of attorney or durable power of attorney needs to be reviewed. They may not need to be updated, but they should be reviewed. An appointment with your estate planning attorney should be treated like a visit for a physical examination—there might not be anything wrong, but you still need a check-up to be sure.

Reference: Smyrna-Clayton (DE) Sun-Times (April 17, 2018) “Change plan as plans change”

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