When To Review and Update Your Estate Plan

Life changes quickly, and an outdated estate plan may create challenges for those you care about most.

• Regular reviews help keep your estate plan aligned with your current wishes and circumstances. Major life events often signal it’s time for an update.
• Changes in assets, tax laws, or personal priorities may require adjustments to ensure your plan remains effective and minimizes potential legal or tax complications.
• Updating involves reviewing all documents, consulting professionals, and communicating changes to beneficiaries, executors, and other key individuals.
• Avoid common pitfalls such as outdated beneficiary designations, inaccessible documents, and overlooking digital assets to protect your legacy and reduce stress for loved ones.

Many people breathe a sigh of relief after creating an estate plan, but checking this off as a task that's “finished” may create unintended problems down the line. As time passes, your circumstances may change. Shifting relationships, evolving financial situations, and updates to relevant laws could affect your original plan. 

Periodically reviewing and updating your estate plan helps to keep it aligned with your wishes and may reduce the risk of complications for loved ones. So, how often should you do this? While every situation is different, certain key events often serve as a reminder that it's time to take another look.

When and Why Should You Update Your Estate Plan?

An estate plan works best when it reflects your current circumstances and priorities. While you might not think about estate planning daily, certain situations may create gaps between how the documents would be executed and your actual wishes. Here are a few common circumstances that often trigger the need for a review.

Relationship changes
Marriage, divorce, birth/ adoption and death may affect how your estate will be distributed. Pets will likely need caregivers and possibly trusts. 

Status changes
People change over time. The person you named as executor may now be too old to do the job. A beneficiary may have acquired a dependency on drugs or alcohol. A beneficiary may have become insolvent. 

Asset changes
Changes in the value of your assets (whether an increase or decrease) may require a careful review of your plan. Tax consequences often differ – there may be federal or, in some cases, state tax consequences depending on the value of your estate. 

Change of location
Laws governing estates and the disposition of property differ from state to state. If you move to a different state, update your plan so that the laws of your new state do not change it. 

Tax law changes
State and federal tax laws can change frequently. Together with your legal and tax advisors, you should consider how any such changes may affect you and your beneficiaries. 

Current events
As the world changes, sometimes existing documents require revisions or updates to properly deal with current issues. 

Change of heart
Of course, there is always the chance that you may simply change your mind about the provisions of your documents, such as the people who will receive your assets or who will carry out your wishes.

How To Update Your Estate Plan

Following a structured process when updating your estate plan helps ensure nothing is overlooked. These six steps may help make the task less overwhelming.

1. Review Existing Documents

Begin by gathering all of your current estate planning documents and carefully reading through them. Make a note of any outdated information, changed circumstances, or provisions that no longer match your wishes. Pay attention to named individuals, asset descriptions, and specific instructions that might need adjusting. 

2. Identify Needed Changes

Make a list of anything that needs to be updated based on your current situation. This may include naming new beneficiaries, changing asset allocations, or updating contact information. If the estate plan includes healthcare documents, you may also wish to update preferences regarding medical care.

3. Consult With Professionals

Work with an estate planning attorney to discuss proposed changes and ensure you understand the implications. A tax professional and financial advisor may also provide valuable insights.

4. Update Legal Documents

Depending on the changes, you may need to update multiple documents, including:

• Last Will and Testament: Updates beneficiaries, executors, guardianship provisions, and asset distribution instructions. Also nominates executors/personal representatives and guardians for minor children.
• Financial Power of Attorney: Changes who can handle your financial affairs while you are living.
• Healthcare Power of Attorney: Updates who makes medical decisions on your behalf and provides specific instructions related to your medical preferences.
• Living Will: Revises your preferences for end-of-life medical care and treatment.
• HIPAA Waiver: Ensures the right people can access your medical information when needed.
• Revocable Trust: Allows a grantor to manage and control assets during their lifetime, make changes as needed, and name another individual to take over management if they die or become incapacitated. Also indicates who receives the assets after the grantor's death. Similar to a will, but avoids probate.

5. Communicate Changes to Relevant Parties

Once you have completed the updates, notify all relevant parties about changes that affect them. This may include new or removed executors, healthcare agents, guardians, and beneficiaries. Taking this step now may prevent confusion later. It also allows all parties to ask questions about their roles and ensure they fully understand your wishes.

6. Keep Updated Documents Secure

Store your revised documents in a safe, accessible location and make sure trusted individuals know where to find them. For an added layer of safety, consider leaving copies with your attorney and providing relevant parties with instructions on how to retrieve them when needed.

Avoid These Common Pitfalls

Even a well-structured estate update may fall short if certain details are overlooked. Taking steps to prevent these common oversights may save you and your loved ones time, expense, and frustration.

Forgetting To Update Beneficiary Designations

Some assets, such as retirement accounts and life insurance, pass directly to the named beneficiary through the terms of the account instead of through your will. Joint accounts and other property held with someone else often pass automatically to the surviving owner. If these designations are outdated, assets may go to someone you no longer intend. Always review and update them when making changes to your estate plan.

Failing To Inform Key Individuals

While you're not required to notify anyone named in your documents, it's helpful to let them know in advance. People named in roles that take effect while you're living, such as healthcare agents or financial power of attorney, should understand their responsibilities. Those named in your will, such as executors or guardians, only act after your death. However, they may benefit from knowing your intentions ahead of time. Surprises during a crisis create unnecessary stress and confusion. Communicating ahead of time allow you to let individuals know that they have a role, confirm they're willing to fulfill it, and make sure they understand your wishes.

Storing Documents in Inaccessible Locations

If your updated documents can't be found when needed, your efforts may be wasted. Store them securely, but also make sure trusted individuals know where they are located and can access them upon your passing.

Overlooking Digital Assets

Online accounts, cloud storage, social media profiles, and cryptocurrency all require clear instructions for access and management. Without proper planning, these assets may be lost or inaccessible. Create an inventory of your digital assets and include instructions for accessing them. Consider whether you want these assets preserved, transferred, or deleted.

Ignoring Recent Legal or Tax Changes

When estate and gift tax laws change, certain provisions in your plan may no longer make sense. Updates that do not account for these changes may lead to unintended tax consequences or administrative challenges.

Creating Inconsistencies Between Documents

Your will, trust documents, beneficiary designations, and powers of attorney should be consistent. Otherwise, conflicting instructions may create legal disputes, resulting in unnecessary costs and delays. Make sure your estate attorney is aware of, and has reviewed, all estate-related legal documents.

Keep Your Estate Plan Working As Intended

While updating your estate plan does require some effort, doing so helps protect your loved ones and your legacy. Keeping documents current and accurate may prevent confusion and delays during an already stressful time. If you've experienced a significant change in your life, finances, or priorities, it may be time to schedule a review. 

When To Review Your Estate Plan – Checklist

In addition to regularly reviewing your will and estate planning documents every three to five years, you should also consider reviewing your estate plan when these situations and life events arise:

• Upon birth or adoption of a child, grandchild or other family member
• Following a marriage or divorce (your own, a family member’s or other beneficiary’s)
• When a family member or someone named in your will dies
• When you desire to fund a child’s, grandchild’s or other person’s education
• When children, grandchildren, or other heirs reach adulthood
• If a child, grandchild or other family member develops personal troubles (e.g., drug or alcohol addiction, large creditors, mental illness)
• Upon changes in your executor’s, guardian’s and/or trustee’s circumstances (including, if you have not seen or heard from them in some time)
• When the value of your assets significantly increases or decreases
• The acquisition or disposition of a significant asset
• New employment, unemployment or retirement
• Upon starting a business or when contemplating the transfer of a business
• When there are significant changes in your business, such as acquisition of a new partner or the death of a partner
• Following changes in tax laws
• When you are approaching age 73 (the age when you are required to begin taking distributions from your individual retirement account, 401(k) or other qualified plan)
• After a move to a different state
• If you are diagnosed with a chronic or terminal illness or disability

For more information, please contact your PNC Private Bank^® advisor.