With each new year, your life changes. And with the arrival of 2020, you may want to ask yourself how these changes affect your estate plan. Even if you already have a plan in place, you may need to review it to make sure it is still effective.
You made a smart choice by setting up your estate plan early. But when you first created it, it reflected your life at the time. Now that time has passed, your life and wealth have likely changed. Your estate plan may need to change as well. Below are a few reasons to update it.
Your wealth changed
As time goes on, you may get a better job or increased wages. You might buy a house or invest in stocks. You may also receive gifts or inheritances from your loved ones. These increases in your wealth can make your original plan too simple.
As you get more assets, you may need more than just a will to pass along your inheritance. And if your wealth gets high enough, you may be subject to federal estate taxes. Reviewing your plan can help you update it to manage your assets properly.
Change in the law
Tax laws are subject to change all the time. While the federal estate tax is high right now, changes may affect your assets. Updating your plan with the current law can help you avoid losing your inheritance to taxes.
As you add people to your family, you may want to add them to your will or trust documents. If you and your spouse have a new child, not updating your estate plan can leave him or her out of the inheritance. And when your children add family members, you may want to include your grandchildren.
You may also need to remove heirs. When people pass away, you will need to take their names out of the will or trust documents. And if you go through a divorce, you may not want your spouse as a beneficiary.
You should review your estate plan regularly
Even if nothing major happens in your life, you should review your plan for updates every few years. Small changes can still affect how your inheritance distributes to your heirs.
With the new year upon you, you may want to take this chance to review the effectiveness of your estate plan.