Skip links

5 Steps to Evaluating Your Estate Plan (Once It’s Already Been Created)

An estate plan should be a part of every complete financial strategy. Without one, you will leave your family, often with the “help” of the court system, to sort out your affairs when you pass. It could be stressful, time-consuming, and in many cases, public. Of course, that’s not what you want for them. 

As important as having an estate plan is, it’s just as important to make sure that you keep it up to date. Otherwise, your family may run into problems as they try to figure out how to fill in gaps or inconsistencies. In some cases, mistakes could make it even more challenging than not having an estate plan at all. That’s why you need to review your estate plan periodically. 

Here are five helpful steps to guide you through evaluating your estate plan.

Step One – Take stock of asset changes annually. 

One of the areas of your estate plan that is very likely to change over time is the assets you hold. 

  • Did you purchase a home? 
  • Make an investment? 
  • Inherit family heirlooms? 

If so, you need to make sure you address these in your will. If you want specific assets to go to certain people, then you need to spell that out in black and white. 

Also consider how new assets will impact the value of your estate. If they push you over the exemption limit ($12.06 million in 2022) then you need to consider how your executor will handle any estate tax. You may need to specify which assets will be sold or make sure there is enough cash to cover them.

Step Two – Reevaluate your family’s needs. 

Your family dynamic will change over time. Any time your family’s needs change, you need to think about any effects that may have on your estate plan. For example, your financial and lifestyle needs when you have an infant may be dramatically different from the type of financial safety net your family will need once your kids get older. 

  • Who would take care of your minor children?
  • Should you place assets in a trust?

You or your spouse’s career can influence this as well. If you have a more flexible work schedule than when you initially drafted your estate plan, that flexibility may mean a difference in care or vice versa.

Step Three – Update your directives. 

An advanced directive lets you have a say in your own incapacity plan. Your advanced directive names a person to make decisions on your behalf and outlines your wishes before you are in an emergency situation. Common reasons this could come into play are injury or illness (often age related – such as dementia). 

As with most elements of your estate plan, advanced directives aren’t permanent. You’re allowed to change your mind! If you want certain actions to be taken in the event that you’re unable to make decisions about your health or finances, make sure these are listed in the appropriate directives. Your annual estate plan review is a good time to make sure your power of attorney is on file and up to date as well. Consider whether your advanced directives:

  • Still accurately convey your intent
  • Cover everything (considering changes as mentioned in the next steps) 

Step Four – Check beneficiaries. 

Incorrect beneficiaries are one of the most common reasons for estate planning mistakes. Should be easy right? All you have to do is list each person that you want to leave your assets to, and it’s taken care of.  

As you may have guessed from the theme of this post, that is another thing you’ll want to check regularly. If something changes and you don’t update your beneficiary designations, you could put your family in a bind and leave them with a complicated mess. For example, maybe you had one kid when you first made your beneficiary elections, but now you have two or three. If you want those kids included, then you better update your beneficiary designations.

What if you’ve gone through a divorce? If you don’t want your ex-spouse to inherit your money if you pass then make sure you update all the relevant documents.

Pro tip: If you are adding, removing, or otherwise updating your beneficiaries make sure you check all the appropriate boxes. You can’t just update your will. Specific account designations, such as the beneficiaries you list on your 401k or IRA, actually supersede anything in your will so you must check every account.

Step Five – Consider extra steps as your situation changes. 

The key thing about your annual review is that you want to capture any changes you need to make to your estate plan due to changes in your life or circumstances. So think about anything that has changed for you over the past year and think critically about what it might mean for your estate plan. For example:

  •  A trust may be fitting if you have children.
  • If you moved, how does the change in state law affect you?
  • Who did you originally name as the executor? Are they still the best choice?

There are many reasons you may want to update your estate plan. You won’t need to every year, but it’s better to check and not need to than ignore it and wish you had. If you need help reviewing your plan (or just getting one in place to begin with!) get in touch with us today, and our team can help you get started.