You have a Will. Maybe you even have a Power of Attorney and Healthcare Proxy. If so, you are doing better than many Americans, as nearly 40% of Americans don’t have any estate planning documents in place according to the AARP. However, you may not be all set just yet. If there have been any life changing events, your estate planning documents could be outdated.
Living Documents
There are many types of legal documents. For example, a commercial business lease is a common type of legal document. The terms of the lease are negotiated and put into writing then signed by all parties. If your commercial lease is for a period of five years, that document will exist in its present form for that period of time. In other words, a commercial business lease is typically not going to change after you sign it.
However, estate planning documents are not like other legal documents. They are considered living documents. What does it mean to be a “living document”? The phrase living document refers to the fact that a Will or other estate planning documents will be ever changing.
For example, let’s say you drafted your Will when you were thirty years old and now you are entering your fifties. Certainly, a lot has changed in that nearly twenty-year span. Maybe you own a house, perhaps even two. You may have children or got divorced. These are all significant changes in your life that will have an impact on your current Will and estate planning documents.
Updating Your Estate Planning Documents
The key is to review these documents on a regular basis. Some people suggest you look at your Will every five years, while on the other end of the spectrum, some suggest every six months. Some people like to review their estate planning documents once a year around tax time. Since they’re pulling out records and documents for taxes, why not review the estate planning documents?
For most people, a good rule is to review your Will every 1-2 years or when major life events occur. A major life event could be the purchase of a boat or a vacation home or a death in the family.
As an example, if the named executor in your Will has died, you must take immediate steps to select a new one. Additionally, if you purchase a second home or win money in the lottery, you need to adjust your Will to reflect your wishes concerning these newly obtained assets so you – instead of the courts – decide where these go.
Reviewing Healthcare Proxy & Power of Attorney
It is equally important to also regularly review other estate planning documents such as a Power of Attorney or Healthcare Proxy. It is not uncommon for someone to select a particular sibling to act as their Power of Attorney only to have a falling out with that person years after drafting the document. This means that you could be stuck having someone you haven’t spoken to in years as Power of Attorney, yet this person will manage all of your finances and more when you cannot.
The critical thing to recognize is that life happens — best friends no longer talk to one another, family members die or move out of state or even the country. The fact that we never know when our health condition could change requires a review of estate planning documents on a regular basis.
Act Quickly
You should act as quickly as possible to change your estate planning documents after a life-changing event occurs. Often, this requires that a new document or set of documents be drawn up. In certain situations, an addendum, codicil or other revision can be made to an estate planning document, and in others, entirely new documents might need to be created.
Plan Now
It is essential to understand the living nature of estate planning documents. If you don’t regularly review and update your estate planning documents, including your Will, Power of Attorney and your Healthcare Proxy, assets may go to unintended beneficiaries, and someone may serve on your behalf who you haven’t spoken to in years, or the courts may have to make decisions for your family and friends. Plan now. Update regularly. Store your documents and share them with relevant parties.
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This article is for informational purposes only and should not be considered legal advice. Consult with a qualified attorney or estate planning professional for personalized guidance.
