If your estate plan was created decades ago, those documents may not reflect your current wishes and definitely do not reflect changes in the law which can impact the administration of the estate at death. An outdated estate plan can cause additional court involvement which will result in additional expense. Further, an outdated estate plan that does not account for changes in family dynamics can cause conflict among surviving family members. Understanding the need for regular review of existing estate plans to ensure the plan will work as intended based on changes in finances, family, and the law is crucial to protecting the estate and minimizing problems after death.
Why outdated estate plans fall short
An estate plan created years ago simply cannot account for the normal changes that occur during life such as the increase (or decrease) in the value of assets, real estate sold or purchased since the plan was established, fiduciaries who have died or are no longer able to serve, beneficiaries named on retirement accounts and insurance policies who are deceased (or incapacitated), and the existence of “digital assets.” In addition, laws change. The past 25 years have seen numerous changes in both federal and state laws governing the administration of a decedent’s assets.
Wills vs. Revocable Trusts
In numerous situations, clients who only needed a will years ago would now be better served by establishing a revocable trust, and clients who established a revocable trust years ago have simpler situations and no longer need the trust. Changes in finances, family situations, and federal and state laws impact the structure of the plan, and what would work before may not be what works best now.
Where Are the Documents & How Are Assets Titled
These are important questions. The older the plan, the more likely it is that documents have gotten misplaced or lost. And even if the client knows where the documents are, who else knows? The person who will step in as fiduciary in the event of incapacity or at death needs to know where to find the documents and who to call for help. If documents are being kept in a safe deposit box, make sure your fiduciaries know which branch of which bank and where the key is located. If the documents are located in a safe at home, who has the combination or where is the key located. If the documents cannot be located when needed, they are worthless.
If you established a revocable trust, is the trust funded? The assets titled in the name of a revocable trust will avoid probate, but if they are not in the trust, they may be included in the probate estate, which adds additional expense and delay.
Taking the next step
Updating an estate plan means reviewing all of the documents, the assets and titling, and the beneficiary designations. If the plan has not been reviewed in the last five to ten years, speaking with a Virginia estate planning attorney now may prevent far more difficult and costly problems later.