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When Should I Update My Estate Plan?

The first step for most individuals in organizing your legal affairs is to put in place an “estate plan.” The term “estate plan” can be an intimidating phrase, but is not generally a complicated process in most situations. The estate plan allows you to develop a roadmap to protect your finances/assets, health care decisions, and create an orderly administration of your affairs. The “estate plan” will include a living will (which expresses your desires regarding the administration of nutrition, hydration, and medical treatment if vegetative or terminal), a health care power of attorney (the person(s) who are given legal authority to make medical decisions on your behalf if you are unable to communicate instructions regarding your care), a general power of attorney over financial and business affairs, and a will. The estate plan may also include a trust. The powers of attorney (health and property) are only valid during lifetime and terminate immediately upon death. The will has no effect during lifetime and will become effective only upon death. Through these instruments you can identify who you want to have fiduciary power over your health and business affairs, identify guardians for minor children, provide for charitable distributions, establish trusts for minor or irresponsible heirs, and provide a plan for pets.

Once the estate plan is in place, it is important the documents be periodically reviewed to insure the documents work and accomplish your intentions when needed. It is recommended you review your estate plan with your legal advisors at least every three (3) years or more frequently if circumstances change. Consider reviewing and updating your estate documents in the following situations:

  • You married after the documents were signed. If you do not update your will or testamentary documents after a marriage, the surviving spouse can be granted an intestate share of your estate upon death. In Idaho, this may include a transfer of all community property and one-half of your separate property. This “omitted spouse” share is a statutory right of a spouse that is not contemplated in a will. If you intend your estate plan to remain the same after a marriage, expressly confirm this intent. This will also apply if children are born after the documents are signed.

  • You recently divorced. You will want to remove your ex-spouse from any fiduciary position and update your documents to contemplate this situation.

  • The persons you name have aged, have their own health or personal challenges, or you have lost touch. The identity and ability of the fiduciaries you have named is critical to implementing your plan and should be reviewed frequently.

  • Heirs die, become incapacitated, have marital issues, or have financial issues. You can consider these new facts in developing the estate distribution and consider disinheriting the person, establishing a trust, or providing an alternate distribution.

  • Your net worth has increased or decreased as this may impact the estate planning that is appropriate.

  • Your intentions and desires change.

  • You have moved to a new state. The probate and estate laws of each state can vary significantly so what was appropriate in one state may not be as efficient or tax efficient in another state.

This article is not intended to replace legal advice applicable to your situation and should be used only for informational purposes. Consult with your legal or tax advisors before implementing any suggestion contained herein.

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