When to Update Your Estate Plan in New York

As a trusts and estate attorney serving clients here in Queens and throughout New York City, I often emphasize that estate planning is not a "set it and forget it" task. Think of your estate plan as a living set of documents, designed to evolve with you through the various chapters of your life. Just as your life changes, so too should your will, trusts, powers of attorney, and healthcare directives to ensure they accurately reflect your current wishes and circumstances.

Failing to update your estate plan can lead to unintended consequences, family disputes, unnecessary taxes, and even the possibility that your assets won't be distributed according to your desires. So, what are the key life events that should prompt you to call your estate planning attorney for a review?

1. Marriage: A New Chapter, A New Plan

Tying the knot is a joyous occasion, and it's also a critical time to review and update your estate plan.

• Wills and Beneficiary Designations: Under New York law, marriage can significantly alter how your assets are distributed if you die without a will (intestate). Even if you have a will, your new spouse may have certain inheritance rights. You'll want to update your will to include your spouse and clearly define how you wish your assets to be distributed. Similarly, review beneficiary designations on life insurance policies, retirement accounts (like 401(k)s and IRAs), and bank accounts.
• Powers of Attorney and Health Care Proxies: You may want to appoint your new spouse as your agent under your power of attorney (to handle financial matters if you become incapacitated) and your health care proxy (to make medical decisions if you cannot).

2. Divorce or Legal Separation: Redefining Your Legacy

The end of a marriage requires an immediate review of your estate plan.

• Automatic Revocations (Sometimes): New York law automatically revokes dispositions to a former spouse in a will and nullifies appointments of a former spouse as executor or trustee, upon divorce. However, this may not apply to all documents or all circumstances, especially with beneficiary designations on assets like life insurance or retirement accounts, which are governed by contract law. It is crucial to proactively change these.
• Revisiting Beneficiaries and Fiduciaries: You will likely want to remove your former spouse as a beneficiary and from fiduciary roles (executor, trustee, agent under a power of attorney, health care agent). You'll need to name new individuals to these roles.
• Guardianship for Minor Children: If you have minor children, your divorce agreement may address custody, but your will is where you nominate a guardian for your children in the event of your passing.

3. The Arrival of Children or Grandchildren: Protecting the Next Generation

Welcoming a new child or grandchild into the family is a wonderful milestone that brings new responsibilities, including updating your estate plan.

• Naming a Guardian: For parents of minor children, this is one of the most critical aspects of a will. If you and the child's other parent were to pass away, who would you want to raise your children? Your will is the place to nominate this person.
• Creating Trusts for Minors: You likely don't want a young child to inherit significant assets outright. A trust can be established (either in your will – a testamentary trust – or as a separate living trust) to hold and manage assets for the benefit of your children until they reach a certain age or milestones you specify. You will name a trustee to manage these funds.
• Updating Beneficiary Designations: Ensure your children or grandchildren are included as beneficiaries where appropriate.

4. The Death of a Loved One: Adjusting to Loss

The loss of a spouse, child, beneficiary, or someone you named in a fiduciary role (like an executor or trustee) necessitates a review of your estate plan.

• Successor Beneficiaries: If a primary beneficiary has predeceased you, your documents may name a contingent (backup) beneficiary. You'll want to confirm these designations still align with your wishes or name new ones.
• Successor Fiduciaries: If your named executor, trustee, guardian, or agent under a power of attorney or health care proxy has passed away or is no longer able to serve, you must appoint a successor to ensure your plan can be implemented smoothly.

5. Significant Changes in Your Financial Situation

Whether it's a substantial inheritance, the sale of a business, a large increase in your investment portfolio, or even significant debt, your estate plan should adapt.

• Asset Protection and Distribution: A major increase in assets might warrant more sophisticated planning, potentially including trusts for tax planning, asset protection, or charitable giving.
• Tax Implications: The federal estate tax exemption and New York State estate tax exemption amounts can change. A significant increase in your net worth could push your estate into taxable territory, requiring specific strategies to minimize estate taxes.
• Business Succession Planning: If you own a business, you need a plan for what happens to it upon your disability or death. This might involve buy-sell agreements, transferring ownership, or planning for its liquidation.

6. Relocating to a New State (or Country)

Estate planning laws are state-specific. If you've recently moved to New York, or if you're a New Yorker moving elsewhere, your existing documents need review.

• Validity of Out-of-State Documents: While New York generally recognizes valid wills from other states, there can be nuances, particularly with ancillary documents like powers of attorney and health care proxies. It's best to have your documents reviewed by a New York attorney if you've moved here to ensure they comply with New York law and will function as intended.
• Community Property vs. Common Law: If you move from or to a community property state, this can significantly impact your estate plan.

7. Changes in Key Relationships

Life brings evolving relationships. Perhaps you've become estranged from a family member previously named as a beneficiary, or a new person has become very important in your life.

• Updating Beneficiaries: Your estate plan should reflect your current relationships and who you wish to benefit from your assets.
• Reconsidering Fiduciaries: The people you trust to act as your executor, trustee, or agent might change over time.

8. Major Health Changes or Diagnosis

A serious illness or injury can underscore the importance of having certain documents in place and may necessitate updates.

• Health Care Proxy and Living Will: Ensure your health care proxy clearly names the person you want to make medical decisions for you if you can't. Your living will (which outlines your wishes regarding life-sustaining treatment) should accurately reflect your current feelings.
• Power of Attorney: If you face a condition that might lead to incapacity, it’s vital to ensure your power of attorney is up-to-date and names someone you trust implicitly to handle your financial affairs. Consider if the powers granted are broad enough or if any specific limitations are now needed.
• Long-Term Care Planning: A significant health diagnosis might also be the catalyst to consider long-term care planning, which can involve Medicaid planning or long-term care insurance, and may require adjustments to your overall estate plan to protect assets.

9. Changes in the Law

Tax laws (federal and New York State estate tax, gift tax, and income tax) and other relevant statutes are subject to change. These changes can impact the effectiveness of your existing estate plan. For example, alterations in estate tax exemption amounts could mean your current plan exposes your estate to more (or less) tax than anticipated. Periodic reviews with your attorney can help ensure your plan remains optimized under current laws.

10. When Your Children Become Adults

Once your children reach the age of majority (18 in New York), several aspects of your plan might need revisiting:

• Trust Provisions: If you created trusts for your children, review the distribution ages and terms. Are they still appropriate now that your children are older?
• Fiduciary Roles for Children: You might now consider naming your adult children in fiduciary roles, such as successor trustees, executors, or even as agents under your power of attorney or health care proxy, if they are responsible and capable.
• Their Own Estate Planning: Encourage your adult children to create their own basic estate planning documents, especially a power of attorney and health care proxy.

The Importance of Regular Reviews

Even if none of these major life events occur, it's a good practice to review your estate plan with your attorney every three to five years. This allows you to confirm it still aligns with your wishes, that your chosen fiduciaries are still appropriate, and that your plan is up-to-date with current laws.

A review doesn't always mean a complete overhaul. Sometimes, only minor amendments are needed, or you might find that your current plan still perfectly suits your needs. The peace of mind that comes from knowing your affairs are in order is invaluable.

Taking the Next Steps

Your life is dynamic, and your estate plan should be too. If you've experienced any of these life changes, or if it's simply been a while since you last looked at your documents, I encourage you to reach out. As an estate planning attorney in New York, I am here to help you navigate these updates and ensure your plan continues to protect you and your loved ones effectively. Please call me at 347-766-2685 to discuss your estate planning questions and concerns.

This article is for educational purposes only - to provide you with general information, not to provide specific legal advice.  Use of this post does not create an attorney-client relationship and information contained herein should not be used as a substitute for competent legal advice from a licensed attorney in your state.