When should I check my estate planning documents?

Estate planning documents, such as Wills, trusts, powers of attorney and Health Care Directives are dynamic documents that need to be changed when the circumstances of your life change. There is a great temptation to feel that you can put the documents into a file or safety deposit box and say: “Thank goodness I won’t have to think about those documents again.” But in fact, as changes in circumstance occur, estate planning documents need to be reviewed to be certain that they are still appropriate for the new circumstances.

Here are several changes that ought to trigger a review of existing estate planning documents:

1. The birth of children. In almost every case, it is most appropriate to create a support trust to provide for the care of any minor children, and to provide for the investment of assets that are to be held until the children attain a suitable age. Such a trust also can provide for the education of the children.

2. Changes in marital status or other personal circumstances. It should be obvious that a change in marital status would be a good reason to review existing estate planning documents. Provision in a Will or trust for a new or a former spouse will likely need to be changed. In most cases, it will be inappropriate to continue to name the former spouse as the agent under a power of attorney to make financial or health care decisions.

3. The value of assets may increase or decrease. The decision to create existing estate planning documents was probably based upon certain assumptions about the value of the assets in the estate, and whether it was likely that the assets would increase or decrease in value over time. Significant changes in the value of assets may cause estate planning documents to be too complex, or perhaps, too simple to continue to meet the objectives originally identified.

4. The law regarding estate taxation may change. The law regarding state and federal estate taxation has changed numerous times and in many different ways over the past several years. Other changes are likely to occur in future years. All of these changes may have a significant impact on the propriety of existing estate planning arrangements. This factor alone is a very substantial reason why existing estate planning documents should be reviewed periodically.

5. Changes in health status. As the condition of health changes, there should be a corresponding evaluation of existing estate planning documents to be certain that the changes in the needs of the individual will be met by the estate planning documents.

For example, if a person is diagnosed with a form of dementia, existing powers of attorney should be reviewed to be certain that they will be sufficient to meet the likely increased need for the agent to undertake the management of financial decisions.

Similarly, if a diagnosis of a terminal condition has been made, all estate planning documents should be reviewed with an estate planning attorney to be certain that the documents are still appropriate in view of this change of circumstance.

All of these events are reason to double check to be certain that existing estate planning documents will be sufficient to fulfill the objectives to provide for loved ones, and to protect assets from unnecessary taxation and dissipation.

Daniel Orville Kellogg