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3 moments when you should review your estate plan

life events review estate plan

If you work with a family lawyer or a financial planner you probably already know the importance of regularly reviewing your estate plan. Typically, it’s a good idea to perform at least an annual review (or more frequently, if advised). 

But even if you don’t work with a legal or financial professional, you should know that there are three moments that should trigger a review of your estate plan. 

If you or your loved one experience one or more of these moments, it’s time to pull out the paperwork and review your plan. 

Additional Reading for Smart Estate Planning

An estate plan should include at least six elements. These elements do not need to be in separate documents, but all six need to be addressed in order to clearly lay out what should happen to your estate, assets and any dependent loved ones. These six elements include: 

  1. Will (a document that spells out how assets should be distributed);
  2. Power of attorney (a document that states you can make legal and financial decisions on your behalf, should you become incapacitated);
  3. Beneficiary designations (assets, such as registered accounts, or policies, such as life insurance, will require you to name a beneficiary — the person(s) who receives the asset upon your death);
  4. Letter of intent (this is a letter that is left to your executor, the person responsible for sorting out your estate once you pass); 
  5. Healthcare directive (like a power of attorney, only this document designates the person responsible for making health decisions for you, should you become incapacitated); 
  6. Guardianship designations (typically found within a will, a guardianship designation allows you to state who is legally responsible for any dependents under age 18). 

#1: Changes in health

If you or a loved one encounters a significant change in health — such as a serious diagnosis, or exposure to a life-threatening illness such as coronavirus, a diagnosis that would require long-term care such as dementia or Parkinson’s Disease, or an accident that disables you or your loved one — it’s time to review whether your existing estate plan documents still meet your needs. 

In your review, make sure your medical directive is up to date with your current wishes; confirm that your will reflects how you want your estate handled and who should benefit. At this point, you may not be able to obtain new or update existing life insurance since it’s typically harder to obtain this type of insurance when medical issues arise; still, review your policies to make sure you have listed the right people as the beneficiaries of these policies.  

#2: Changes in finances

Whether it’s job loss, early retirement, or a significant loss in your investments, say from a stock market dive, or, on the flip side, a sudden windfall such as a retirement package or inheritance, a sudden change in finances should prompt a review of your estate plan documents and directives. 

Not only do you want to confirm that your wishes are still applicable should you die, but you also want to verify that your new financial situation doesn’t change anything. For instance, this new financial situation may put you into a different tax situation. You may also want to explore where investments are held and whether or not it would be advantageous to distribute assets within different accounts or among family members. 

#3: Changes in family status

Another moment that should prompt an estate plan review is when there is a change in family status. This includes births, deaths, divorces, marriages, and adoptions. First, consider whether or not your estate plan is flexible enough to accommodate this change in family status. 

For instance, a new marriage may introduce another legal authority that should act on your behalf; or your current estate plan could unintentionally disinherit a child or grandchild that was born after your current estate plan was created. 

Conversely, you may want to amend your beneficiary designations, due to divorce or death. 

All of these life changes, and others, should be considered in your estate planning goals. Keep in mind, that the more intricate or complex the changes, the greater the need to seek out professional help. 

If you already work with a professional, consider setting up a meeting to confirm that your wishes and desires are still being met with your current plan. Even if you don’t work with a professional, make sure you review your will, your life insurance, your health directives and your financial plan. 

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Romana King

Romana King is an award-winning personal finance writer, real estate expert and the current Director of Content at Zolo. Romana has contributed to business and lifestyle publications including, Toronto Sun, Maclean’s, MoneySense, Globe & Mail Custom Content Team, and The Toronto Star. Among her achievements, Romana won silver for her annual Where to Buy Now real estate package in the 2019 Canadian Online Publishing Awards. In 2015, she won a SABEW Business Journalism award. When she was editor of CI Top Broker, Romana helped guide her team to obtain its first KRW Business Journalism nomination, and in 2011, she was part of a small team that helped MoneySense win Magazine of the Year at the 34th annual National Magazine Awards.