Why You Should Update Your Estate Plan After Major Life Events

Creating an estate plan is a foundational step in securing your legacy and protecting your loved ones. However, many individuals mistakenly view estate planning as a “one-and-done” task. They sign the documents, file them away in a safe or drawer, and forget about them. The reality is that life is dynamic, and your estate plan should be too. As your circumstances evolve, so should the legal documents that govern your assets and healthcare decisions.

Failing to update your estate plan can have significant, unintended consequences. It can lead to assets being distributed to ex-spouses, minor children being left without a designated guardian, or increased tax burdens that deplete the inheritance intended for your beneficiaries. Keeping your plan up to date ensures that your assets are distributed according to your actual wishes, that your loved ones are protected, and that your documents remain legally valid and effective.

Here is EC Law Counsel’s comprehensive guide on the major life events that should trigger an immediate review of your estate plan.

Family and Relationship Changes

The most common reason to update an estate plan involves changes within your family structure. These personal shifts often directly impact who you want to inherit your assets or who you trust to make decisions on your behalf.

1. Marriage or Divorce

Entering into a marriage is a joyous occasion that significantly alters your legal and financial status. You will likely want to name your new spouse as a primary beneficiary on your will, trust, and retirement accounts. Furthermore, you may wish to appoint them to key fiduciary roles, such as your executor or power of attorney.

Conversely, divorce demands immediate attention to your estate documents. While Florida automatically revokes bequests to an ex-spouse upon divorce, relying on these statutes is risky and can lead to litigation where an ex-spouse can argue you wanted to leave them assets. 

It is far safer and more prudent to actively amend your documents to remove an ex-spouse as a beneficiary, executor, trustee, or healthcare agent. This prevents them from inheriting your assets or holding decision-making power over your healthcare or finances.

2. Birth or Adoption of a Child or Grandchild

Welcoming a new child or grandchild into the family is another critical milestone. You will want to ensure these new family members are included in your estate plan so they are provided for financially.

For parents of minor children, this update is vital for another reason: naming a guardian. If you pass away without designating a legal guardian, the court will decide who raises your children, which may not align with your preferences. 

Additionally, you may want to establish a trust to manage assets for the child until they reach a responsible age, rather than having them inherit a lump sum at 18.

3. Death of a Beneficiary or Fiduciary

If a loved one named in your plan passes away, your documents need to reflect this loss. If a primary beneficiary dies, you must decide who will inherit that share of the estate. If an executor, trustee, or legal guardian passes away, you need to appoint a successor to ensure there is someone capable of managing your affairs.

4. Changes in Relationships

Sometimes, the nature of our relationships changes without a legal event like marriage or divorce. You may become estranged from a family member or reconcile with someone you had previously distanced yourself from. These shifts in personal dynamics are valid reasons to adjust your estate plan to reflect your current wishes regarding inheritance and decision-making authority.

Financial Changes

Your financial situation is rarely static. Significant fluctuations in your net worth or the acquisition of new assets necessitate a review of your estate planning strategy.

5. Significant Increase or Decrease in Assets

A substantial increase in wealth — whether through inheritance, the sale of a business, or successful investments — can expose your estate to higher taxes. In these instances, advanced tax planning strategies may be necessary to minimize the estate tax burden on your heirs.

On the other hand, a significant decrease in assets might make specific bequests impossible to fulfill. For example, if you left a specific cash gift of $50,000 to a charity but your liquid assets have depleted, that provision may need to be revised to a percentage of the residual estate to ensure your primary beneficiaries are not shortchanged.

6. Inheritance or Large Gift

Receiving a large inheritance can complicate your own estate planning. You may need to restructure your trust or will to account for these new assets, ensuring they are protected and distributed according to your goals.

7. Buying or Selling Property

Real estate is often one of the most valuable assets in an individual’s portfolio. Buying a new home, vacation property, or investment real estate should prompt a review to ensure the property is titled correctly. 

For instance, if you have a revocable living trust, you typically need to transfer the title of the new property into the trust to avoid probate. Selling a property that was specifically bequeathed to someone in your will also requires an update to prevent confusion or legal challenges.

Business Ownership

For business owners, estate planning is inextricably linked to business succession planning. Starting, buying, or selling a business represents a major shift in your asset profile.

8. Starting a Business

If you start a business, you need to determine what happens to your interest in the company upon your death or incapacity. Who will run the daily operations? Who inherits the financial value? Without a clear succession plan, the business you worked hard to build could flounder or collapse.

Health and Legal Changes

External factors, such as changes in the law, and internal factors, like your health, play a significant role in the viability of your estate plan.

9. Serious Illness or Incapacity

A new medical diagnosis or a decline in health should trigger a review of your advance directives. You must ensure that your healthcare proxy (medical power of attorney) and living will accurately reflect your current wishes regarding medical treatment and end-of-life care. 

Additionally, ensure that your designated agent is still willing and capable of acting on your behalf during a stressful time.

10. Changes in Estate or Tax Laws

Federal and state laws regarding taxes and estates are subject to change. Thresholds for estate taxes, rules regarding retirement accounts (such as the SECURE Act), and state-specific probate laws can all impact the effectiveness of your existing plan. 

Regular consultation with an estate planning attorney ensures your plan remains compliant and takes advantage of any new legal tools available to protect your assets.

Relocation

Moving is a stressful process that involves many logistical hurdles, but don’t overlook the legal implications.

11. Moving to a Different State

Estate laws vary significantly from state to state. A will or power of attorney created in one state may not be valid — or may be interpreted differently — in another. For example, some states have specific requirements for how many witnesses must sign a will or what language must be used in a healthcare directive.

If you move to a new state, it is imperative to have an attorney licensed in that jurisdiction review your documents. They can ensure your plan complies with local laws and that your transition does not leave gaps in your coverage.

12. Moving to a Different Country

International moves add a layer of complexity regarding residency, tax treaties, and the recognition of foreign legal documents. This almost always requires skilled legal advice to navigate the cross-border implications for your estate.

Protect Your Legacy

Your estate plan is the voice that speaks for you when you cannot speak for yourself. It is the mechanism that protects your family and preserves your hard-earned legacy. By keeping it updated, you ensure that your voice remains clear and your wishes are honored.

Don’t let an outdated document undermine your life’s work. If you have experienced a major life event recently, or if it has been several years since you last looked at your estate plan, take action today. Contact EC Law Counsel to schedule a review and ensure your future is secure.