The question is asked frequently, but not frequently enough: when should I have my estate plan reviewed? I don’t think there is a one-size-fits-all answer to the question. There are, however, a number of indicators, some of which are less obvious than others.
Having an out-of date estate plan can be just as bad as not having one at all, even if you aren’t J. Howard Marshall. You remember him: married Anna Nicole Smith in 1994 when he was 89 years old (and she was 26), died in 1995, left a fortune which his son and Anna Nicole spent literally the rest of their lives fighting over, including one matter that went all the way to a decision by the United States Supreme Court in 2006. The estates of Marshall’s son and Anna Nicole are probably still fighting. I don’t know what sort of estate plan Marshall had (except that it excluded Anna Nicole), and there probably would have been a fight anyway, but if you want to minimize the possibility of people fighting over your estate for the rest of their lives, having it reviewed and updated at the appropriate times will certainly help.
One of the biggest indicators that it’s time for a review is, of course, if you have had a significant change in family circumstances: a birth, a death, a marriage, a divorce. Yes there are laws that prevent some of the bad things that could happen if you failed to get your estate plan updated after such an event, such as, for example, your former spouse inheriting your entire estate under a will that you signed before the divorce. There are many other unintended consequences, however, that are either inadequately covered, or not covered at all, by those laws. It probably isn’t worth the gamble, and could result in a mess, if you figure that you don’t need to do anything about your estate plan after such an event.
Another fairly obvious reason to have your estate plan reviewed is if you have relocated to another state since your estate plan was prepared. Although estate planning documents will usually “travel” from one state to another, that is, they will usually work in any state as long as they were valid in the state where they were executed, there are situations where they may not work as they were intended. Differences in property law from state to state, particularly if you are married, can create unintended consequences even if there is nothing wrong with the documents themselves.
A more frequently overlooked indicator that it is time to have your estate plan reviewed is simply the passage of time. Estate plan documents can be outdated even if your circumstances have not changed. A prime example of the ravages of time on your estate plan documents is your durable power of attorney. Frequently a bank or other financial institution will refuse to honor a power of attorney that was signed more than eighteen months or two years ago. Another problem that can arise with old estate plan documents is that changes in the law since a document was executed, while they may not render the document invalid, can result in the document not functioning as it was intended.
A significant change in your financial circumstances is another, often overlooked, reason to have your estate plan reviewed. If you have acquired real estate, set up a new bank, brokerage, or mutual fund account, purchased life insurance, or acquired any other significant asset, do you know what will happen to it under your current estate plan? The answer may not be as obvious as you think, depending on whether you own it jointly with someone else, designated someone else (or your estate) as a beneficiary, or own it through your business.
So, is it time to have your estate plan reviewed? As I said at the outset, I don’t think there is a single right answer to the question of how often a review is necessary, but in general, if your estate plan documents were signed more than five years ago, chances are that there has been some change in your circumstances that warrants a review.
DOES MY “FLASHY BLUE” (OR HOT PINK, OR CHARTREUSE) HOUSE HURT YOUR PROPERTY VALUE?
…and if so, should the city government be able to tell me I can’t paint it that color? This item appeared in the October 10 The Eagle of Bryan-College Station, Texas (via Overlawyered.com):
Two residents asked that the council discuss mandatory exterior color standards for buildings.
Such paint ordinances are usually set by homeowners’ associations in the suburbs. Historical districts also regulate colors in an effort to preserve the original appearance of homes, said Jeffrey Rous, a University of North Texas professor who teaches urban economics.
Farmers Branch resident Tom Bohmier wonders whether there’s a way to balance ruling out some shocking colors while keeping individuality. One of his neighbors has a home painted in several colors, including a flashy blue.
“It tends to harm the value of the neighborhood when people are shopping for homes,” he said.
But Rous, who’s building a home in Farmers Branch, questions whether it’s proper for government to decide which color palette is considered garish or beautiful.
“To say that we’re going to have government officials dictate what constitutes good aesthetics, I’m not sure local elected officials should be making those decisions,” Rous said. “I’m not sure what the need is for this.”
. . .
[M]ost homes in Farmers Branch are brick, with trim or shutters painted in neutral colors. A handful are more brightly colored, such as one wood home with Kelly green trim and an upscale two-story house with one burnt orange side.
Residents Matt Burton and Robin Bernier proposed the color standards at a City Council meeting this month, presenting photos showing homes with shades they found unsightly.
. . .
Bernier… told The Dallas Morning News: “When you paint your house some fluorescent or garish color scheme, you negatively affect my [home] value.”
For now, city officials plan no action.
“We’re going to look into it and see what the legal ramifications are,” said city spokeswoman Nicole Recker.