As an estate planner, my primary goal is to help you ensure that your assets are distributed according to your wishes after you pass away. However, estate planning is not a one-time event; it is an ongoing process. Life is full of changes, and your estate plan should reflect that dynamic nature. Let’s delve into the situations that might require a review and possible revision of your estate planning documents.
Personal Changes
- Birth: When a new family member arrives, they might be considered a ‘pretermitted heir’—a child born or adopted after a will is made, who is not mentioned in the will. In California, such heirs may have rights to part of the estate unless it’s clear from the will that the omission was intentional. If you want to disinherit or include them, or clarify how your children are defined in your will, a revision is necessary.
- Death: The passing of a beneficiary can significantly alter your estate plan. It’s essential to reconsider alternate beneficiaries, examine non-probate property beneficiary designations, and ensure your successor fiduciaries are up-to-date.
- Marriage or Divorce: These major life events can profoundly impact your estate plan, whether it’s your own or that of a child or grandchild. In California, divorce can automatically nullify the provisions in a will or trust that favor a spouse unless the estate plan explicitly states otherwise. However, the time between separation and final divorce decree can be a legally precarious period. Furthermore, the final divorce decree may impose restrictions that need to be reflected in your estate plan, and a new spouse must be included as well.
- Changes in Relationships: Over time, our relationships with friends, business associates, or charities can change, which may prompt a reassessment of their roles as fiduciaries or beneficiaries. Consider whether a gift in trust might be more appropriate than an outright transfer, or if you need to establish a spendthrift trust for those who cannot manage money well. Additionally, you might need to address the equalization of gifts among family members.
Economic Changes
- Transfer Taxes: Tax laws are constantly evolving. In 2025, the estate and gift tax system is expected to change, potentially affecting estates of various sizes. It’s crucial to stay informed (see our upcoming post for more details) and adjust your trust instrument accordingly. Please see our recent post Estate Taxes In 2025: Wait Until Too Late?
- Change in Wealth: A significant increase or decrease in your wealth—whether through inheritance, business success, or failure—may necessitate revisions to your estate plan. If your wealth has decreased, you may need to reevaluate gifts or bequests, particularly substantial donations to charity.
Other Considerations
- Non-Probate Assets: Assess how non-probate assets, such as life insurance or retirement accounts, are being distributed and whether that aligns with your overall estate plan.
- Life Insurance: Consider the role life insurance plays in providing for your heirs or paying estate taxes.
- Out-of-State Real Estate: Owning property in another state can lead to ‘ancillary probate.’ It’s important to address this in your estate plan to avoid complications.
- Relocation: Moving to a different jurisdiction can present new opportunities, like creating a domestic asset protection trust, but also challenges that need to be addressed in your estate plan.
- Business Planning: For business owners, having an updated buy-sell agreement is vital to ensure a smooth transition upon your passing.
- Disability Planning: Consider potential disabilities and how they would impact your estate, emphasizing the need for comprehensive disability planning within your estate plan.
Regular reviews of your estate plan, ideally every three to five years or after significant life events, will help ensure that your wishes are honored and your family is protected. Remember, an outdated estate plan can be as ineffective as having no plan at all. Consult with estate planning attorney Klaus Gottlieb from Wealth Care Lawyer with offices in San Luis Obispo, CA and Cayucos, CA, to ensure your plan remains aligned with your current circumstances and future goals.
