As we all know, Congress rarely leaves tax law alone for long. Changes in tax laws can mean that your estate plan no longer accomplishes its goals.
Changes in Non-Tax Laws
Periodically, state legislatures change substantive non-tax laws. These laws may affect who gets your property, how your estate is managed or distributed.
Divorce (yours, child, other)
According to the National Center for Health Statistics, approximately one-half of first marriages end in divorce. Divorce is particularly disruptive to an estate plan. Goals which you had before, such as providing for the now ex-spouse, probably have changed. A new plan should be put in place quickly, especially children are involved.
Illness - Protecting Assets for Long Term Care and Nursing Home Costs
If you or one of your family members becomes seriously ill, you may want to consider changing your estate plan to reflect their increased needs. For example, if a loved one now has or later develops special needs, you can design a plan to leave assets in a trust that will not disqualify him or her from receiving government benefits.
Change in Desires
With the passage of time, you learn more about yourself and others. For example, you may decide that your brother John, who lost everything because of poor investment decisions may not be the best selection to manage your assets.
Marriage (yours, child, other)
When you marry (or remarry), you and your spouse bind your lives and futures together. Marriage can automatically give each spouse some rights in each other's property. However, marriage does not automatically change your will or trust to provide for the new spouse or to protect your children from a previous marriage. It is important to examine your estate plan in light of the new situation, your mutual and separate goals.
Birth or Adoption of a Child
The addition of a new family member can radically alter your estate plan. It is likely that, if your spouse and you are both gone, you would want your assets to go to your children for higher education and other reasons. Also, you will need to appoint someone to act as guardian for the new child.
Change in Assets
A significant change in the nature or extent of your assets may give rise to different estate planning opportunities. For example, the acquisition of a farm or business may raise issues of succession planning and discounted gifting.
If you or your spouse have received or expect to receive a significant inheritance, there may be new opportunities to reduce taxes or provide creditor protection.
Change in Residence
While estate planning documents typically are valid from one jurisdiction to another, each state has its own peculiarities. For example, a couple moving from a separate property state to a community property state might find it advantageous to convert their separate property to community property. This can allow for advantageous income tax treatment of the property at the death of the first spouse.