Regular reviews keep estate plans fresh
By AdvocateDaily.com Staff
Kirsh, a partner with Schnurr Kirsh Oelbaum Tator LLP, says many people feel their work is done after finally getting around to drawing up an estate plan. However, with more than three decades at the bar, she has enough experience to know that oftentimes it is necessary to review and change your estate plan.
“Things change and life doesn’t always turn out exactly as you thought it would,” Kirsh says. “The advice we give is to review your will every five years and see if it still makes sense in terms of your current circumstances.”
For instance, she says clients often describe gifts to beneficiaries as fixed dollar amounts. But if the total value of the testator’s assets changes dramatically over the years, it can throw off the intended balance.
“Let's say you have a $500,000 estate, and you want to give $100,000 in specific gifts to charities with the rest split between your two children,” Kirsh says. “But 20 years later, when you die after incurring more health-care expenses than you expected, there’s only $300,000 left in the estate. The $100,000 in gifts will take priority and your children will be left with much less than you thought.”
She says one solution to the problem is to describe gifts entirely in percentages.
“The downside is that everyone becomes entitled to review an accounting and seek a passing of accounts,” adds Kirsh, who notes that a review of the estate plan would have caught the dwindling asset issue.
In addition to reviewing your will every five years, Kirsh says you should also review following a major life event or change in family status, such as deaths of children or spouses, adoptions, births, marriages or divorces.
Remarriage in particular demands a review, she says, since in Ontario marriage automatically revokes any will that either spouse had in place before tying the knot.
“People don’t always think of estate planning when they’ve had a big life-cycle change, but it is a good idea in the long run,” Kirsh says.
Major financial milestones should also trigger a check of the estate plan, she notes.
“When you make a will at 60, you hope it’s going to make sense when you die, but it might not if you live until you’re 95,” Kirsh says. “Maybe you sold the family business for more or less than you were expecting. Significant changes in wealth, either up or down, can make a big difference.”
She says frequent reviews can also catch smaller issues that have the potential to cause headaches for beneficiaries and trustees during estate administration.
“You get cases where a charity has changed its name or ceases to exist in the time since the will was made,” Kirsh says. “A beneficiary might also have a different last name if there’s a marriage.
“You don’t have to constantly check your will, but every five years is a reasonable interval,” she adds.