Our source article for this blog post uses a nice hypothetical situation to illustrate why it is important to not only have an organized and thorough estate plan, but also why it is vital to update your estate plan over time. You can read the specifics in that article (and it does get specific), but the point is this: if you leave your estate unattended, either entirely or over a period of years, you run the risk of leaving your family or your beneficiaries out in the cold (financially speaking).
We won’t get into the details of the story here. Instead, let’s talk about some potential problems that can arise if you don’t have an estate plan, or you don’t regularly update your estate plan.
To start, imagine getting married or having a child. These are two huge life events that absolutely necessitate that you alter (or create) your estate plan. You need to craft provisions that clearly define what your new spouse or your newborn son or daughter stands to receive when your estate plan is executed. Without these provisions, your assets could be lost to the IRS or the taxes could dramatically reduce what they stand to receive.
If you don’t update your will or estate plan over time, difficult situations can arise. Maybe you listed someone as a beneficiary the first time you created your estate plan — but since then, he or she has passed away, or you have had a significant and permanent falling out with that person. Or what if the beneficiary you listed is a family member who has made some irresponsible and dangerous decisions in recent years?
These situations, again, necessitate that you reconsider and update your estate plan.
Source: Marco Eagle, “An outdated estate plan can cost you,” Irv Blackman, March 27, 2016