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The importance of reviewing and updating your estate plan

Tiffany Dowell Lashmet Published on 24 July 2015

If you have already prepared an estate plan, give yourself a pat on the back – because you are ahead of most Americans. Statistics show that more than half of Americans ages 45 to 64 have not even drafted a will.

The work, however, does not end when the estate plan is drafted and the documents are signed. It is critical estate plans be reviewed periodically to ensure no changes need to be made.

What is an estate plan?

It is important to understand that an estate plan is more than just a will, although a will is certainly an important part of the plan. Most estate plans also include a power of attorney, a medical power of attorney and an advanced healthcare directive.

Moreover, consider preparing an inventory list that includes information that may be needed by the executor of your estate, such as bank account locations and information, phone numbers for attorneys or accountants, a list of insurance policies, etc.

Once the estate plan has been completed, it is critical to take the next step of ensuring someone knows where such documents are located. It is recommended that all estate planning documents be kept together in a safe location.

Someone – be that the appointed executor of the state, an attorney, a spouse, a child – should always be aware of the location of such documents.

Updating the estate plan

It is important estate plans be periodically reviewed in order to ensure no changes need to be made. When major life events occur, it is recommended that an estate plan be reviewed shortly thereafter.

For example, if a person gets remarried or divorced, if there is a death in the family, or if financial circumstances greatly change, a person’s estate plan should be carefully reviewed to determine whether changes may be necessary.

Along with reviewing the basic estate documents like a will and power of attorney, one should remember to review non-probate designations that will pass assets at death as well.

For example, when a person is designated a beneficiary for a retirement plan or a life insurance policy, those designations control the disbursement of those assets, regardless of what a person’s will says.

For example, assume Rancher A designated his brother as the beneficiary of a life insurance policy he took out in his 20s. Assume that in his 60s, Rancher A is estranged from that brother and drafts a will leaving all of his assets to his wife.

Regardless of his wishes, and regardless of his will, the life insurance proceeds would pass to his brother due to the beneficiary designation. For this reason, reviewing and updating beneficiary designations can be as important (maybe even more so) than updating a will, yet many people overlook this issue.

Another critical consideration that should be periodically re-evaluated is the potential tax liability facing the person’s estate. As was discussed in a recent Progressive Cattleman column, for 2015, the federal estate tax is imposed on estates valued at more than $5.43 million (or $10.86 million per couple) at a rate of 40 percent.

Financial circumstances could change after an estate plan is drafted that could take this from a non-issue to a very important consideration.

Setting a consistent review date each year can help a person to remember to take this step. For example, an estate plan could be reviewed every Jan. 1 or on the person’s birthday each year. This type of regular review will help prevent issues if something were to change after the will was signed.  end mark

Tiffany Dowell Lashmet
  • Tiffany Dowell Lashmet

  • Assistant Professor & Extension Specialist Agricultural Law
  • Texas A&M AgriLife Extension Service
  • Email Tiffany Dowell Lashmet