When you first set up your estate plan, it can take a lot of time and effort. When you finish the initial set-up, you likely feel relieved that the bulk of the work has come to an end. But an estate plan is not a “set and forget” project. Over the years, you will still have to take time to ensure it is as updated as possible.
But how often should you update your estate plan anyway? Are there rules or guidelines to dictate this process?
Reviewing every three years
While no official law exists that determines when or how you should update or review your estate plan, experts have opinions about the best timing. The American College of Trust and Estate Counsel looks into reasons why you should consider updating your estate plan, and discuss the best times to do so.
Generally speaking, most experts state you should review your estate plan once every three years if nothing is currently going on in your life. If your life undergoes significant change, on the other hand, you should review and update as quickly as possible. For example, say you recently got a divorce. You likely do not want your ex-spouse to benefit from your life insurance policy in the event that you suddenly die.
Changes to focus on
Primarily, you want to focus on changes to assets and changes to beneficiaries in your life. This can include the death or divorce of a partner, the birth or adoption of a child and the estrangement or addition of relatives or close family friends. Asset changes refer to anything substantial such as filing for bankruptcy or coming into a lump sum of money.
If you face any of these changes, consider updating your estate plan quickly. Otherwise, you can take a little more time to review it at your own pace.