There are certain estate planning documents that are beneficial to every New Jersey family. Wills, trust agreements, powers of attorney and advance directives for health care are documents that can be invaluable when unexpected life events occur such as accidents, sudden illness, or death. However, once created, the documents should not be locked away and forgotten. There are any number of situations and experiences that suggest the importance of reviewing and amending estate planning documents on a regular basis so that they can be aligned with your wishes at the time of their use.
As estate planning attorneys, we are frequently asked by clients how often they should review their estate planning documents. Should it be every three years … every five years … every ten years? Rather than consider the response in terms of time, we prefer to advise clients to think in terms of need or life stage. On occasion, reviewing estate planning documents after a specified period of time has passed will be prudent, but more often other factors will weigh more heavily. Here are some things to consider when deciding whether your estate planning documents are due for review.
Is there a need to change a document?
For example, after a move to a new state, the estate planning documents should be reviewed by an attorney licensed to practice in that state. Further, if the executor named in a will has died, moved out of state, or is no longer the appropriate person to serve, then the will should be updated to substitute another executor for the one who will no longer serve. Similarly, if a guardian for a minor child is no longer appropriate because he or she has relocated to another state, or because the guardian’s personal circumstances have changed, it may be necessary to revise the will to name a new guardian. A change in the tax laws may also suggest a need for revision of a will or trust.
Have you entered a new life stage?
For example, when children are minors, it’s oftentimes appropriate to establish a trust to hold a child’s inheritance until a child reaches a specific age in order to safeguard the funds and minimize potential waste. As a child grows up, the need for a trust may be eliminated, or the terms of a trust might warrant a change to give a child different benefits or more control. Similarly, when a child becomes an adult, it may be appropriate to name the child to a position of responsibility, as perhaps appointing the child as an executor.
How often should I review my estate planning documents in general?
For people with a need for more concrete guidance, and who think in terms of time, we generally recommend that documents be reviewed at least every ten years. There are indeed some practical reasons for this recommendation. Estate planning documents encompass not only wills and trust agreements, but also lifetime planning documents such as a power of attorney or advance directive for health care/living will. Particularly in the case of a power of attorney, periodic updating is important because individuals or institutions presented with a power of attorney are more comfortable accepting a current document. Older powers of attorney, although perfectly legal, can raise concerns that the document may have been changed, revoked. or superseded in the interim period. A power of attorney that is more current is less apt to raise a question.
Have you reviewed your beneficiary recently?
An important part of the review of estate planning documents is a review of beneficiary designations on life insurance and retirement accounts. These assets are often a significant amount of a family’s wealth. Wills do not control the distribution of such assets, which are considered non-probate assets that pass “outside of the will.” These assets might be distributed to children or grandchildren at inappropriate ages if the beneficiary designations are not consistent with the will. A simple change to the beneficiary designations will allow these non-probate assets to be managed for young beneficiaries until they reach appropriate ages. A good rule of thumb is to review beneficiary designations whenever you are reviewing your will.
The answer to the title question, then, is that estate planning documents should be reviewed when there is a need (i.e., to change a provision that no longer accords with one’s wishes, or because of a relocation to another state), or a new life stage (i.e., to bring children into positions of responsibility, or to eliminate a provision that no longer serves its original purpose), or every ten years.
For help with your estate planning needs, please call on Elizabeth Candido Petite, Esq., or Lauren Neureither, Esq., who are both members of our Wills, Trusts and Estates group. Their contact information, as well as other articles of interest about estate planning topics, may be found on our firm website, lindabury.com.
David G. Hardin serves as the Chair of Lindabury’s Wills, Trusts and Estates Group where he concentrates his practice in the areas of wills, trusts and estates. His professional practice focuses on advising individual and corporate clients with respect to estate and gift tax planning and estate administration. David is a Fellow of the American College of Trust and Estate Counsel. He served a term as Chair of the Real Property, Probate and Trust Law Section of the New Jersey State Bar Association. Prior to holding that position, he served as a Section Vice Chair for two years. As a Past Chair, David is a member of the Section’s Board of Consultors. David has also served for several years as editor of the volumes of the New Jersey Practice Series on “Wills and Administration.” He has published numerous professional articles, and is a regular lecturer to professional groups. He can be reached at dhardin@lindabury.com.