Regularly updating an estate plan is a good idea in general. Someone who has gone through a major change may need to review their documents. Removing certain people as beneficiaries or from positions of authority is sometimes necessary.
Testators may also need to update their documents to add new resources or eliminate instructions about assets that they no longer possess. They may need to add new family members or make changes to their instructions based on evolving personal circumstances. It is usually a good idea to review estate plans regularly and whenever there have been major changes to someone’s situation. Of course, mistakes when updating documents can undermine the benefits derived from doing so. One common oversight when making updates can potentially lead to probate conflicts in the future.
People don’t update all documents at the same time
An estate plan may consist of numerous different documents, including wills, trusts and advance directives. Testators may also use other arrangements to allow for the distribution of assets after their death and the protection of their loved ones.
Important terms not included in the estate planning paperwork itself often do not receive consideration when someone updates their will or trust documents. For example, people typically have to file paperwork designating specific beneficiaries for their life insurance policies. The paperwork filed with the insurance company is what ultimately decides who receives the proceeds from that policy.
Even if someone provides alternate instructions in their will, the probate courts defer to what the insurance company has on record. A similar scenario can unfold when testators use transfer-on-death designations to pass on financial accounts or establish deeds to arrange for the transfer of real property after their death.
It is easy to overlook insurance policies, financial accounts or deeds that were put into storage somewhere safe when thinking about estate planning updates. Those who keep track of their accounts and resources and revisit paperwork filed with insurance providers and financial institutions in addition to their estate planning paperwork can help ensure that probate results in an appropriate distribution of their resources.
