How often should you update your will and other estate planning documents?

At a minimum, you should review your estate planning document every five years to make sure they still reflect your wishes. But it's really a good idea to get into the habit of reviewing your estate planning documents once a year. When major changes occur in your life, you may remember to update your will and other documents but you might not even think of it when major changes occur in other people's lives. The close friend that you named as executor may have moved to New York or Qatar for a new job and no longer be the best choice. The brother you named as guardian of your minor children may have recently divorced, so he and his wife and children will no longer provide the stable, loving family unit you imaged your kids dropping into. As your parents grow older, they may no longer want the hassle of dealing with banks and insurance companies and disgruntled family members as the executor of your estate. Or they may not be able to say ÒNoÓ to their grandkids and so may no longer be the best choice as trustee. Reviewing your estate planning documents regularly will encourage you to think through the changes that have occurred and their possible impact on your family.

In addition to a regular – preferably annual – review, you should also review your will and other estate planning documents when big life changes occur:

1. If you marry, separate, divorce, or reconcile. In each of these cases, you may want to change the executor, trustee, and beneficiaries named in your will and the beneficiaries of any life insurance policies, retirement plans, IRA accounts, brokerage accounts and any other account that names your spouse as a beneficiary or Pay-on-Death recipient. While Texas law may treat your divorced spouse as having pre-deceased you for some purposes, he or she will not be treated that way while your divorce is pending. Additionally, if they are listed as a joint owner rather than a beneficiary of bank or brokerage accounts, they may still have a claim against those accounts. Finally, the law of another state may govern some of the contracts, which could potentially leave your ex-spouse as a beneficiary despite a divorce.

2. If you have a child. If you don't modify your will after the birth or adoption of a child, it can the distribution you planned in your carefully drafted may be modified by law. If it is your first child, then your will probably didn't name a guardian for your minor children or provide for a trust. If you take responsibility for a child without legally adopting them, you may want to amend your will to provide for them.

3. If a loved one dies. If they are named as a beneficiary, executor or trustee, or as your agent under a power of attorney, then it is suddenly important who you named as their successor. When originally drafting these documents, you may have considered the need for a successor very unlikely and named someone without serious consideration.

4. If you move out of state. Generally, the law of the state where you were living at the time of your death governs the administration of your estate. If you move to a non-community property estate, there may be different rules governing what you and your spouse are entitled to receive from each other's estates. You should consult an attorney in your new state of residence to determine whether your will still meets your needs. Also, if you move to a state with a more complicated and expensive probate process, then a living revocable trust may become a better alternative for you. If someone you have named as executor, trustee or guardian moves out of state, you may want to review whether they remain the best choice. Fax, email, ease of travel, and a local attorney can make it work, but they will probably become less involved in your life. After a couple of years, someone else may seem a better choice.

5. If your financial situation changes significantly. If you come into a lot of money either by inheritance, employment, lotto or some other way, you may want to consider setting up trusts either to avoid estate taxes or to provide for your spouse and children. If your financial situation declines, you may want to revise some financial gifts in your will. Often people give specific amounts to various people and then leave whatever is left to the most important people. When you have a large estate, this works. But if your estate decreases, the specific gifts may take most of your estate, leaving little for the people you expected to receive the bulk of your estate.

6. If there are major health changes for yourself or someone who is dependent on you. If your health declines, you will want to be sure to have powers of attorney for healthcare and financial matters in place. If a child or other family member experiences a serious medical issue or becomes disabled, you may want to consider setting up a special needs trust and plan for future Medicaid qualification.

7. If you start or sell a business – or your business grows or declines. You may have based your estate plan on one kid getting the family business and others getting something else of equal value. If you sell the business or it becomes worth much less, you may need to revise your will to balance things out - if that's your intent. If the business is worth a lot more than when you prepared your estate plan, again, you may need to adjust to balance things out. You also need to consider what happens to the business if you become incapacitated. If you have insurance to allow a partner to buy your estate out and the business has dropped in value, you may need to reconsider who gets the insurance proceeds above the amount necessary to buy the business

8. If you open new accounts or acquire new assets. You should have an inventory that lists all of your major assets and their locations – including every bank account, IRA, brokerage account, safe deposit box, life insurance, piece of real estate, and anything else that your family might not find by just looking around your house. Whenever you open a new account or buy something new, just add the new items to the inventory by hand. The purpose of the inventory is to make finding your assets as easy as possible for your family and to make sure they get everything they are entitled to receive. If you have a brokerage account with eTrade but don't leave a paper trail, how are they supposed to find it? You should also mark out accounts that you've closed or assets that you've sold so your executor won't spend time contacting banks, etc. to try to collect assets that you no longer own. At a minimum you should review your inventory annually, just in case you forgot to add something when you acquired it.

Statutory Durable Power of Attorney: I have heard reports that some financial institutions and title companies won't accept these – or really fight accepting these – if they are over three years old. So you may want to sign a new one every three years or so. Additionally, if your power of attorney authorizes your agent to sell real estate, title companies want a legal description of the property set out in the power of attorney. So if you buy new property, you may want to execute a new power of attorney with the new property description included.

Letter to Executor. Many people prepare a letter to their executor that provides instructions as to how they would like specific items of personal property to be distributed. It is easier to draft a new letter to revise the distributions than to execute a new will, and you should also check the letter annually to make sure it still reflects your wishes. However, if the letter is not executed in the same manner as a will, it will probably not be binding on your executor.

Don't mark up your will. If you want to update or revise your will, do not write changes on your will and initial them – that won't work. You need to formally execute a new will or a codicil in front of witnesses and a notary. After signing a new will, be sure to destroy old wills so there is no conflict or confusion about which one governs.