Is it time to review your estate plan?

It’s easy to put off making changes to your estate plan. After all, the plan doesn’t even take effect during your lifetime. But there are good reasons to regularly monitor your estate plan and make any adjustments now, not later.

One reason is that certain changes or additions to an estate plan should be implemented sooner, such as deciding how to cover the tax payable on estate assets. Another is the same reason you already made a will—to ensure your loved ones are looked after if you pass away unexpectedly.

Ideally, you should review and potentially amend your estate plan whenever a new situation arises that may call for a change. However, if several years have passed since you last examined your plan, it’s wise to conduct a review to ensure it’s up to date.

Here are key financial and life changes that warrant a review of your estate plan.

Changes involving designated individuals

You have named a power of attorney or mandate representative, an executor¹ and possibly a trustee. If any of these individuals or their alternates have passed away, moved out of province or are no longer capable or interested, you’ll want to name a replacement.

If a beneficiary suffers a serious illness or disability, you may consider establishing a trust.

Marital status or family changes

Separating or getting divorced, or marrying or entering a common-law relationship, usually means changing beneficiary designations in your will, any registered plans,² and, if you have one, in a life insurance policy.

If you are remarrying and have children from a previous marriage, you may want to explore estate planning strategies to provide for both your new spouse and your children. For example, you might make your children beneficiaries of a permanent life insurance policy or set up a spousal trust that provides income for your spouse and capital for your children.

You need to update your will and estate plan upon the birth or adoption of a child, and may wish to do so upon the birth or adoption of a grandchild. Also, you may need to update your estate plan when a child reaches the age of majority, perhaps to designate the adult child as a beneficiary or an executor.

Developments in your financial life

You don’t need to update your estate plan for moderate changes in your net worth, but you’ll likely need to if a major change arises that requires a new tax strategy or affects distributions to beneficiaries. Such developments include receiving a significant inheritance, purchasing a vacation or rental-income property or experiencing a major business-related change, such as buying or selling a business or deciding to hand it over to your children.

Should you have assets that have appreciated considerably, you may want to implement a tax strategy to manage the capital gains tax that would be payable by your estate, such as using a spousal rollover, making gifts during your lifetime or purchasing life insurance.

Perhaps a parent with two or more children gifts one child money for a down payment and then amends their will to reflect this advance in that child’s inheritance.

Why reviews matter

Even if you update your estate plan when major life changes arise, it’s still important to review it every few years because some reasons for updates can sneak up over time.

For example, a retiree expects to leave a large balance of Registered Retirement Income Fund (RRIF) investments to a child and wants to plan how the estate will cover the resulting tax liability. Someone names a close friend as their executor but questions that choice as the friend now seems burdened by work hours and personal matters. A parent had planned to give their vacation property to their two children, but one child hasn’t visited the property for years and talks about moving out of the province. Another parent has recent cause for concern about leaving a child a large inheritance and may wish to have the sum distributed in smaller amounts annually.

Many changes will involve us, while others will involve only your lawyer. You can always contact us to discuss any possible changes or updates to your estate plan.

¹ Also known as a liquidator, estate representative, administrator, estate trustee or personal representative, depending on the province.
² Quebec residents name the beneficiaries of registered accounts in their will.