When to review your estate plan

It’s easy to think you can put off changes to an estate plan – the plan doesn’t even take effect during your lifetime. But it’s important to react in good time because many changes call for strategies best implemented sooner rather than later. Also, you make estate planning changes now for the same reason you made a will and purchased life insurance: to benefit your loved ones if you pass away prematurely.

Life changes calling for a review

Typically, you should review an estate plan whenever a new situation arises that potentially calls for an update. But if several years have passed without looking over your plan, it’s a good idea to conduct a review anyway.

Keep in mind that although a will is central to estate planning, much more is involved. Assets could be distributed outside of the will, through such means as life insurance and registered savings plans. Certain family situations may call for the establishment of a trust. Estate planning also includes powers of attorney for both financial matters and personal care. And you may require tax planning to help preserve the value of estate assets. 

Here are key financial and life changes that are reason to review your estate plan.

Change in appointed individuals

In the process of estate planning, you name individuals as beneficiaries, attorney (for power of attorney), executor and possibly trustee. If your executor, alternate executor, trustee or alternate trustee passes away, moves out of province or is no longer capable or interested, you’ll need to name a replacement. You may also find that your estate has become more complex to administer, now requiring the services of a corporate executor.

If a beneficiary suffers a serious illness or disability, you may consider establishing a trust. You may also wish to add beneficiaries, such as grandchildren.

Marital or family status changes

You have quite a few changes to make in the event of separation or divorce, or a new marriage or common-law relationship. There’s the larger picture of revising the financial aspect of your estate plan and the details of changing beneficiary designations – from your will to a life insurance policy. If you’re newly married with a blended family, you may want to explore estate planning strategies to help provide for your new spouse and children from a previous marriage. You also need to update your will and estate plan upon the birth or adoption of a child, and may need to make changes when a child reaches the age of majority.

Developments in your financial life

There’s no need to update your will and estate plan every time there’s a routine change in your net worth. But you should review your plan if a major change affects distributions from your estate or calls for a new tax strategy. Such changes include receiving a significant inheritance, purchasing vacation or rental income property or any major business-related change – buying or selling a business, or deciding to hand over the business to your children.

If assets appreciate considerably, you may need to implement a tax strategy to manage capital gains tax payable by your estate. Also, consider digital assets. Assign your executor or another person the responsibility for online financial accounts and their passwords, any digital content on websites and social media, and related digital property.

If you’re in retirement and plan to leave a large balance in your registered retirement savings, without a spousal rollover opportunity, you may need to plan how the estate will cover the tax liability.

Changing distribution of assets

A variety of scenarios may arise when you want to change the way you allocate estate assets among beneficiaries. For example, say that vacation property was to be handed down to both children, but now one child moved out of province. Perhaps one child will inherit the property, and the other child will be made beneficiary of a permanent life insurance policy. Another example is if you decide to make a charity one of the beneficiaries of your will.

The timing of distributions can change. Instead of giving a beneficiary one lump sum, you might now have reason to make smaller distributions over time.

Help with your review

You’ll make many of these changes with us, and others with your lawyer, but please feel free to contact us to discuss any or all possible changes to your estate plan.