When Should an Estate Plan Be Reviewed?

POSTED ON: June 14, 2021

The documents may still be valid but if they are stale or outdated, you may spend significant money trying to use them down the road.

When Should an Estate Plan Be Reviewed?

If your parents don’t remember when they last reviewed their estate plan, then chances are it’s time for a review. Over the years, wishes, relationships and circumstances change, advises the recent article, “5 Reasons To Have Your Parents’ Estate Plan Reviewed,” from Forbes. An out-of-date estate plan may not achieve your parent’s wishes, or be declared invalid by the court, or may even have disastrous consequences. Having an estate planning attorney review the estate plan may save you money in the long run, not to mention the stress and worry created by an estate disaster. I generally recommend that an estate plan be reviewed every five (5) years.  If you need reasons, here are five to consider.

Reason #1: Financial institutions are wary of dated documents. Banks and other financial institutions look twice at documents that are not recent. Trying to use a Power of Attorney that was created twenty years ago is bound to create problems. One person tried to use a document, but the bank insisted on getting an affidavit from the attorney who prepared it to be certain it was valid. While the son was trying to solve this, his mother died, and the account had to be probated. A “fresh” power of attorney would have solved the problem.

Reason #2: State laws change. Things that seem small become burdensome in a hurry. For example, if someone wants to leave a variety of personal effects to many different people, each and every one of the people listed would need to be located and notified. Many states now allow a separate writing to dispose of personal items, making the process far easier. However, if the will is out of date, you may be stuck with a house-sized task.

Reason #3: Legal document language changes. The SECURE Act changed many aspects of estate planning, particularly with regard to retirement accounts. If your parents have retirement accounts that are payable to a trust, the trust language must be changed to comply with the law. Not having these updates in the estate plan could result in an increase in income taxes or costly fees to fix the situation.  Consider having your estate plan reviewed for this reason.

Reason #4: Estate tax laws change. In recent years, there have been many changes to federal tax laws. If your parents have not updated their estate plan within the last five years, they have missed many changes and many opportunities. It is likely that your parents’ assets have also changed over the years, and the documents need to reflect how the estate taxes will be paid. Are their assets titled so that there are enough funds in the estate or trust to cover the cost of any liability? Here’s another one—if all of the assets pass directly to beneficiaries via beneficiary designations, who is going to pay for the tax bills –and with what funds?

Reason #5: Older estate plans may contain wishes from decades ago. For one family, an old will led to a situation where a son did not inherit his father’s entire estate. His late sister’s children, who had been estranged from him for decades, received their mother’s share. If the father and son had reviewed the will earlier, a new will could have been created and signed that would have given the son what the father intended.

Bonus Reason #6: Older estate plans may contain provisions related to forced heirship laws in effect decades ago.  Some wills, even to this day, have provisions relating to giving a forced heir their “forced portion” under Louisiana law.  But forced heirship now only applies to heirs under the age of 24, or an heir of any age who has a physical or mental condition such that it MAY render them incapable of caring for themselves of their property. The terms may be different in your will, which can create problems.  Have your estate plan reviewed for provisions relating to forced heirship.

Bonus Reason #7: Some older wills may not provide for independent administrationLouisiana adopted provisions relating to “independent administration” of estates in the early 2000s.  To this day, I come across Last Wills and Testaments that do not provide for independent administration, which can help streamline the probate process.  If you need your executor to sell your home after your death (and you don’t leave your home to one of your heirs), strongly consider changing your administration to independent administration, and having your estate plan reviewed for this reason.

Bonus Reason #8: Now may be a good time to start the process to qualify for Medicaid long term care benefits. It may be possible that when you created your estate plan years ago, you did not consider qualifying for Medicaid long term care, whereas today this might be more important, particularly if you have no (or little) long-term care insurance.  A Last Will and Testament will not get you qualified.  You will have to have more serious plan to achieve that goal.

These types of problems are seen routinely in my office. Take the time to get a proper review your or your parent’s estate plan, to prevent stress and unnecessary costs in the future.

Be sure to BOOK A CALL with me to talk about the plan, and to discuss any possible changes that you may need.

Reference: Forbes (May 25, 2021) “5 Reasons To Have Your Parents’ Estate Plan Reviewed”

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