Why Updating Your Estate Plan Matters
Creating a Will or Trust is an important step, but it’s not the last one. Over time, families grow and evolve, assets shift, and laws change. If your estate plan isn’t updated to match your life over time, it may fail to carry out your intentions when it matters most.
Think of your estate plan like a roadmap. If the roads change but the map doesn’t, your loved ones could end up lost.
Life Events That Should Trigger a Will or Trust Review
1. Marriage or Divorce
When you marry, you’ll want to ensure your spouse is provided for in your estate plan. Conversely, if you’re unfortunate enough to have to go through a divorce, it’s critical to remove an ex-spouse from roles such as executor, trustee, or beneficiary. Illinois law does revoke certain powers to act on behalf of your estate for ex-spouses automatically, but relying on the statute instead of updating your plan leaves too much room for error. For instance, the law does not account for your ex-spouse being named the beneficiary on any of your accounts, life insurance policies, or retirement accounts.
2. Birth or Adoption of a Child
Welcoming a child into your family is one of the most important times to update your estate plan. You’ll want to name guardians, create or update a trust for their benefit, and ensure resources are set aside for education and care.
3. Death or Disability of a Loved One
If a beneficiary, trustee, executor, or guardian passes away or becomes incapacitated, you’ll need to update your plan to name new trusted individuals to act on your behalf.
4. Buying or Selling Property
Major changes related to your assets, like purchasing a home, selling a business, or acquiring investment property need to be managed properly. For your accounts, you will want to diligently make sure that your beneficiary designations are correct and that your Trust is properly funded, so your family will avoid having to go through probate to transfer your assets. For your assets, you want to make sure that they are properly titled in the name of the Trust. Properly funding your Trust is by far the most important part of having a Trust. It is also the most often overlooked and misunderstood aspect of estate planning. We always recommend consulting with a professional, who can provide you with guidance, so you can rest assured that your Trust is properly funded. It is a crucial and necessary step to ensure people’s estate plans will work as intended when they need them most.
5. Significant Financial Changes
Whether it’s a big promotion, a windfall, or retirement, financial changes in your life can alter how you want your assets distributed. Updating your plan ensures taxes and transfers are handled efficiently. Additionally, if that financial change means that you have more than $4 million, in Illinois, you’re now on the hook to pay estate taxes. Learn more about strategic tax avoidance planning here.
6. Relocation to Another State
Estate planning laws vary by state. If you move, your old Will or Trust may not comply with your new state’s requirements. This is especially important for Illinois families who relocate elsewhere — or for new Illinois residents bringing in old plans.
7. Changes in Relationships
If your relationships with family members, trustees, or beneficiaries change, your estate plan should evolve and change right along with them. For example, you may want to add grandchildren, provide for a new charitable cause, or remove someone no longer in your life. That is why we always recommend that you do not share your estate planning documents with others, but rather let them know where your documents may be found in an emergency. That way, if you have made a change to your plan over the years, there won’t be conflicting documents floating around in the ether.
8. Changes in the Law — Why This Can’t Be Overlooked
Estate planning doesn’t exist in a vacuum. Laws shift over time, and those changes can dramatically affect how your plan works.
A prime example is the SECURE Act, passed in 2019 and modified by the SECURE Act 2.0 in 2022. Before this law, most beneficiaries who inherited retirement accounts like IRAs could “stretch” distributions out over their lifetime, allowing the account to grow tax-deferred for decades.
The SECURE Act changed that. Now, with limited exceptions, most non-spouse beneficiaries must withdraw the entire balance of an inherited IRA or 401(k) within 10 years.
For families, this means:
- Higher Taxes for Beneficiaries: Adult children inheriting retirement accounts may be forced to withdraw large sums during their peak earning years, pushing them into higher tax brackets.
- Trust Planning Implications: Many older trusts were written with “lifetime stretch” provisions for retirement accounts. Those provisions may no longer work as intended, potentially locking assets in a trust while forcing rapid withdrawals and heavy tax burdens.
- Need for Strategic Planning: Families may need to rethink whether to leave retirement accounts directly to beneficiaries, funnel them through updated trusts, or consider other tools like Roth conversions.
If your estate plan was drafted before 2020 and has not been reviewed since, there’s a strong chance your retirement account planning is outdated.
For Illinois residents, over the past few years, we’ve seen the enactment of a new Trust Code, amendments to the Power of Attorney Act, and a change related to our Small Estate Affidavits.
Why We Review Every Three Years — For Free
Even if none of these life events occur, your estate plan still needs regular check-ins. Small details — like beneficiary designations or account titling — can easily fall out of sync and create big problems later. Not to mention, your plan needs to remain in line with the legal landscape and up-to-date with the law and tax code.
That’s why at Family Wealth & Legacy Legal Solutions (FWLLS), we schedule a free review with every client at least once every three years. This proactive approach keeps your plan current, your assets properly aligned, and your family protected without you having to guess whether it’s time for a change.
Built-In Flexibility: How FWLLS Saves You From Costly Amendments
Another common frustration with estate planning is the expense of updating documents. At many law firms, even minor changes require formal amendments which can be costly.
At FWLLS, we approach things differently. We design your plan with built-in flexibility, giving you the ability to make certain updates on your own — without needing to come back for costly revisions every time something small changes in your life. Of course, when bigger life events happen, we’re here to guide you, but our structure makes day-to-day updates simpler and more affordable.
Common Pitfall: Assuming a Trust Never Needs Updates
Many people believe that once they create a Trust, they’re done forever. The truth is, an unfunded or outdated trust can be worse than no plan at all. Assets must be retitled into the trust, and the trust must be reviewed regularly to stay aligned with your wishes.
For more on this, see our related article: Pitfalls of Estate Planning: 5 Essential Tips to Ensure Your Estate Plan Isn’t Worthless.
Your life doesn’t stand still — and your estate plan shouldn’t either. At Family Wealth & Legacy Legal Solutions (FWLLS), we make sure your will or trust evolves with you. Book a call today and protect your loved ones with a plan that works now, not just in the past.
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This article is a service of Family Wealth & Legacy Legal Solutions (FWLLS). At FWLLS, we do not just draft documents; we ensure you make educated, informed and empowered decisions for yourself and the people you love. That’s why we offer a Family Wealth & Legacy Strategy Session™, during which you will get educated and begin to prepare to avoid life’s most common legal problems and get a plan in place to make the best possible choices for the people you love. You can begin by calling our office today to schedule a Family Wealth & Legacy Strategy Session and mention this article to find out how to get this $900 session at a significantly discounted rate, or even for free.