Estate planning lawyers hear it all the time—people meaning to update their Will and Trust, but somehow never getting around to actually getting it done. The only group larger than the ones who mean to “someday,” are the ones who don’t think they ever need to update their documents, says the article “12 Different Times When You Should Update Your Will” from Kiplinger. The problems become abundantly clear when people die, and survivors learn that their Will and estate plan is so out-of-date that it creates a world of problems for a grieving family. Sometimes when people die their families also learn of the drawbacks a Will-based plan holds, and many wish that they had explored estate plans centered on Trusts.
A very important fact is that a Will is a basic planning tool. A far more sophisticated and useful document is a Trust. At McManus Estate Planning, LLC, your estate plan will most likely be centered around one or more Trusts. The Will becomes secondary, but still remains of some importance.
There are some Wills that do stand the test of time, but they are far and few between. Families undergo all kinds of changes, and those changes should be reflected in the Will and their Trusts. Here are twelve times in life when Wills [and the overall estate plan] need to be reviewed:
Welcoming a child to the family. The focus is on naming a guardian and a trustee to oversee their finances. The Will should be flexible to accommodate additional children in the future.
Divorce is a possibility. Don’t wait until the divorce is underway to make changes. Do it beforehand. If you die before the divorce is finalized, your spouse will have marital rights to your property. Once you file for divorce, in many states you are not permitted to change your Trust or Will, until the divorce is finalized. Make no moves here, however, without the advice of your attorney.
Your divorce has been finalized. If you didn’t do it before, update your Trust and Will now. Don’t neglect updating beneficiaries on life insurance and any other accounts that may have named your ex as a beneficiary.
When your child(ren) marry. You may be able to mitigate the lack of a prenuptial agreement, by creating Trusts, so anything you leave your child won’t be considered a marital asset, if his or her marriage deteriorates or ends.
Your beneficiary has problems with drugs or money. Money left directly to a beneficiary is at risk of being attached by creditors or dissolving into a drug habit. Upgrading from a Will-based plan to a Trust is an option. Updating your Trust allow a trustee to only distribute funds under optimal circumstances protects your beneficiary and their inheritance.
Named executor or beneficiary dies. Your old Will may have a contingency plan for what should happen if a beneficiary or executor dies, but you should probably revisit the plan. If a named executor dies and you don’t update the Will, then what happens if the second executor dies?
A young family member grows up. Most people name a parent as their executor, then a spouse or trusted sibling. Two or three decades go by. An adult child may now be ready to take on the task of handling your estate.
New laws go into effect. In recent months, there have been many big changes to the law that impact estate planning, from the SECURE Act to the CARES act. Ask estate planning Attorney McManus every few years if there have been new laws that are relevant to your estate plan.
An inheritance or a windfall. If you come into a significant amount of money, your tax liability changes. You’ll want to update your Trust and Will, so you can do efficient tax planning as part of your estate plan.
Can’t find your estate planning binders? If you can’t find the original estate documents, then you need new documents printed. McManus Estate Planning LLC can work with you to make sure that your new documents have language that revokes all prior documents.
Buying property in another state or country. Some countries have reciprocity with America. However, transferring property to an heir in one country may be delayed, if the will needs to be probated in another country. It is recommended that you engage legal counsel in each jurisdiction where you own property, if they are in more than one state or country.
Family and friends are enemies. Friends have no rights when it comes to your estate plan. Therefore, if families and friends are fighting, the family member will win. If you suspect that your family may push back to any bequests to friends, consider adding a “No Contest” clause to disinherit family members who try to elbow your friends out of the estate.
Reference: Kiplinger (May 26, 2020) “12 Different Times When You Should Update Your Will”