An Excellent Short List of Reasons to Continually Review Your Estate Documents

I have had the opportunity to meet with a number of clients recently about either updating old estate documents or drafting new ones for the very first time.  In the process, I have come to understand that estate planning isn't a check the box item.  It is always there waiting to be updated or coordinated with other aspects of your life.  I thought it would be worthwhile to point out a few key points that should be reviewed periodically:

1) Individuals named in your documents - Executors, guardians, Trustees and attorney-in-facts are likely always changing.  It may make perfect sense to have your next door neighbor, who is a responsible person and a good family friend, serve as your executor.  However, if you move away then maybe your sibling would be better served than continuing to keep the neighbor in that capacity.  

The same theory stays in place for guardians and/or Trustees.  It may be perfectly reasonable to name a good friend or sibling as the guardian of your children at some point.  However, if they end up with four kids of their own or are promoted to a high demand job, then looking after you children or managing a trust for the benefit of your children may not be the best thing anymore. 

For these reasons and more, it is nice to dust off the estate documents from time to time and review who is named to serve in various capacities. 

2) Dispositive provisions for children - When your children are young, you may tend to give them the benefit of the doubt about when and how they will inherit assets in the future or you may choose to be very skeptical of how they will handle money.  In either case, your knowledge and understanding of your children's ability to manage their affairs grows up with them.  You may ultimately change your mind and decide that it is better to keep assets in a trust indefinitely because the child is in a highly litigious career, marries an unknown spouse, or simply can't seem to make good financial decisions.   Or they may end up showing excellent management skills and you don't want to hamstring them by keeping capital out of their hands when you pass away by tying up the assets in trust indefinitely.

Regardless, choosing to review the dispositive provisions in your estate document allows you to continue to make smart decision about your heirs ability to inherit as they grow up. 

3) Laws change.  Congress - both in Washington and in states across America - are regularly passing new laws that impact your estate documents.  Maryland passed a uniform Power of Attorney in 2011 which all Maryland residents should obtain.  The Federal estate tax exemption amount is set to revert from $5 million back down to $1 million at the end of the year.  For the first time in years, the Federal lifetime gift tax exemption amount is $5 million (for tax years 2011 and 2012).

4) You change.  I can't count how many clients have left the DC area over the last 5 years.  Nor is it determinable how many clients added to their family through children or grandchildren, started a new business, bought a second home, purchased additional life insurance, or have simply rethought what they want their estate to do. 

These and others are constant reasons to review your estate documents every several years to make sure that they are up to date.  I remember as a kid (I think I was about 7 or 8) one time having a severe anxiety attack about death.   I can't remember what caused it but I had a long conversation with a family friend who is a pediatrician.  Many of us today still have anxiety in thinking about death which makes reviewing the estate documents a difficult task. 

With that being said, think about how many times we all complain about Congress not doing what is necessary even though it is difficult.  Sometimes we just need to dig deep and power through a difficult process.  Consider rewarding yourself with nice bottle of wine, a good dinner with family/friends, or some other treat once it is done.  After all it can't be bad to pamper yourself every couple of years.