Which Parts of Your Financial Plan Need an Annual Tuneup?

Many people assume financial plans made today for tomorrow are good forever, but that can be a costly mistake. Here’s a quick list of what needs an annual tuneup:

Life Insurance
You should review your life insurance annually or whenever you have a significant life change. Examples of the changes that require your immediate attention are:

  • Marriage or divorce
  • Birth of a child or grandchild
  • Greater financial responsibility
  • Death of a beneficiary

A review of your policies should include more than adding or removing beneficiaries. Consider whether your coverage is still adequate or if you need more. An annual review is also a good time to decide whether to convert term policies to permanent insurance.

A review of your will should also consider how any current or pending changes in tax laws will affect its terms. Make sure you also address financial windfalls, as well as setbacks. This is especially true if a financial change will influence the equitable distribution of assets.

Most trust attorneys agree that an annual review of revocable trusts is a sound practice. The law regarding trusts is always evolving warranting a regular examination. Trusts are unlike wills in that recently divorced spouses are not automatically disinherited. Divorced spouses must be removed manually from trust documents.

Estate Planning

An annual review of your entire estate plan follows the same rules as trusts, wills, and life insurance. It will confirm that each of the components still meet your overall estate plan.

Other life changes that may need to be addressed include your retirement and any sizable inheritance you have received as these may have an impact on your estate’s tax status. It is also advisable to engage in a more thorough review with the aid of a lawyer, like an estate planning lawyer from Bott & Associates, Ltd., every five years.