Life changes, and your estate plan should keep up. A well-structured plan ensures your assets go to the right people, reduces uncertainty, and helps prevent disputes. Major life events should prompt a review of your estate documents to ensure they reflect your current wishes and financial circumstances. If it has been several years since your last update or you have experienced a significant change, now may be the time to revisit your plan.
Birth or Adoption of a Child
When you welcome a child into your family it is a significant life change that should prompt a careful review of your estate plan. If you do not already have a will, now is the time to create one. A key part of this process is naming a guardian in your will to ensure that if something happens to you, a trusted person will be responsible for raising your child. Without this designation, a court will decide, which may not align with your wishes or values.
If there is any chance your child could inherit assets while they are still a minor, setting up a trust is essential. Without a trust, their inheritance may be subject to court supervision, and they could receive full control of the assets at age 18, which is often not ideal. A trust allows you to set the terms for how and when your child receives financial support and ensures that funds are managed appropriately until they are mature enough to handle them.
Marriage or Divorce
Marriage and divorce both have significant legal implications for an estate plan, and failing to make necessary updates can lead to unintended consequences. If you have recently married, it is important to review your estate plan to ensure it reflects your intentions regarding your spouse’s inheritance. This is also an opportunity to reassess your entire estate plan, including beneficiary designations on retirement accounts, life insurance policies, and payable-on-death accounts. If you have children from a previous relationship, you will need to determine how to balance their inheritance with the financial security of your new spouse.
Divorce is another major life event that warrants a full review of your estate plan. While Iowa law automatically revokes provisions in a will that name an ex-spouse as a beneficiary or fiduciary, other elements of your estate plan may remain unchanged unless you take action. Wills, trusts, powers of attorney, property titles, and beneficiary designations should all be updated to reflect your post-divorce intentions. If your former spouse was named as an executor, trustee, or agent under a power of attorney, you will need to designate new individuals to these roles. Failing to make these updates could leave key decisions in the hands of someone you no longer want managing your affairs.
Significant Changes in Financial Status
A significant change in your financial situation is a crucial moment to reassess your estate plan. Whether you have received an inheritance, sold a business, experienced a major increase in income, or acquired high-value assets since our last review, your plan should be reviewed to ensure your wealth is preserved and distributed according to your intentions. Likewise, if your financial situation has declined, you may need to revise your plan to account for changing priorities and ensure it still provides for your needs and those of your beneficiaries.
Effective estate planning goes beyond simply passing down assets, it also involves strategies to protect your wealth from unnecessary taxation, creditor claims, and long-term care costs. If your net worth has increased, you may need to implement tax-efficient wealth transfer strategies, such as implementing trusts or lifetime gifting strategies, to reduce future estate tax exposure. If you own a business, succession planning becomes even more critical to ensure a smooth transition for your heirs and business partners. For those facing financial setbacks, reviewing asset protection measures and long-term care planning options can help safeguard what remains. Regardless of the direction of the financial change, an updated estate plan ensures that your wealth is protected and structured in a way that supports your long-term goals.
Death of a Beneficiary or Fiduciary
When someone named in your estate plan passes away, it is important to review and update your documents to ensure they still reflect your wishes. If a beneficiary dies before you, their inheritance may not pass as you intended. For example, if you expected your adult children to inherit, but a grandchild now receives an inheritance instead, the absence of a trust in your estate plan could leave the inheritance unprotected.
The death of an executor, trustee, or agent under a power of attorney also requires attention. If your named executor or trustee is no longer living and you do not take proactive steps to adjust your plan and name a replacement, a court may step in to appoint a replacement for you, potentially delaying or complicating the administration of your estate. Likewise, if the person designated under your financial or healthcare power of attorney has passed away or is no longer capable of handling these responsibilities, you may need to name a new agent to ensure your affairs are properly managed if you become incapacitated.
Health Changes or Disability
A significant health change, whether it’s your own or that of a loved one, should prompt a review of your estate plan to ensure it still meets your needs. If you or your spouse receive a serious medical diagnosis, suffer an injury, or develop a condition that may lead to long-term incapacity, your existing documents may need to be updated to reflect new realities.
For instance, if you have a financial power of attorney and healthcare directives in place, you should review whether your chosen agents are still the right individuals to manage your finances and make medical decisions on your behalf. A sudden decline in health might reveal the need for a backup agent or require a change if the person you originally named is no longer available or suitable for the role.
A health crisis in your family can also necessitate changes to your plan. If a loved one develops a disability or requires long-term care, you may need to reconsider how you structure inheritances, beneficiary designations, or asset protection strategies. Leaving money directly to a disabled child or relative could put their eligibility for government benefits at risk, making a special needs trust a better option for ensuring their financial security.
Time Since Your Last Review
Even if you haven’t experienced a major life change, it’s still important to review your estate plan periodically. A good rule of thumb is to revisit your documents every three to five years to ensure they still align with your current goals and take advantage of any updates in the law that could improve their effectiveness. If it’s been a while since your last review, now is a great time to schedule an appointment and make any necessary adjustments.
Final Thoughts
Estate planning is not something you do once and forget about. Life changes, and your plan should change with it. Whether you have had a child, experienced a shift in your financial situation, or gone through a major life transition, keeping your estate plan up to date ensures that your wishes are honored and your loved ones are protected. If you have experienced any of the events mentioned above, or if it has simply been a while since your last review, consider meeting with an estate planning attorney at Laird Law Firm to ensure that your plan still aligns with your goals and best serves your needs.
