There are certain times in life when you should update your last will and testament.
If you already have a last will in place, you have done more planning than the majority of your fellow Americans.
Although you can certainly congratulate yourself, do not become overly confident.
Your last will needs to be reviewed and perhaps updated periodically.
According to a recent Kiplinger article titled “12 Different Times When You Should Update Your Will”, certain life events should trigger you to update your last will.
What are they?
The birth of a child.
Whether the child is your own or a grandchild, you will likely want to reevaluate your estate plan.
If the child is your own, you should designate a legal guardian to rear your child if both parents die.
While the child is a minor, you will need to select someone to manage any inheritance on behalf of the child.
If you want your child to inherit, you may need to list him or her in a new last will (or codicil) as an heir.
In fact, this very concern was the subject of a blog post this week.
The threat of divorce.
Sometimes the writing is on the wall.
Sometimes it is not.
Your spouse is going to leave you.
If this is the case, you may want to start the procedure to update your last will.
If you die before the divorce is finalized but chose to wait to update your plan, your ex would receive everything.
Certain states have rules regarding when and how a person can update a last will during divorce proceedings.
Ask an experienced estate planning attorney for advice before making any changes.
The finalization of divorce.
If you updated your last will before or during your divorce proceeding, you may be not need to change your last will after the divorce is finalized.
If this is not the case, you should go ahead and update your last will.
Once you are divorced, you should also review the beneficiary designations on your life insurance policy and retirement accounts without delay.
You do not want your ex to cash in on these assets when you die.
The marriage of a child.
Many marriages do not last.
Should this be the sad reality for any of your children, you will want to prepare accordingly.
It is unlikely you would like someone who broke the heart of your child to have access to any inheritance you leave your child, yes?
If your child did not sign a prenuptial agreement, you can update your last will to include an inheritance trust.
Doing so can protect an inheritance from being treated as a marital asset.
The risk of drugs or financial irresponsibility.
Do you have a loved one who is an addict?
Perhaps one of your heirs has a poor track record with managing money.
You likely do not want your inheritance to fuel deadly drug habits or be lost to creditors.
By updating your will-based plan to include an inheritance trust, you can protect your hard-earned assets for and from your heirs.
The death of a beneficiary or an executor.
The loss of a loved one is tragic.
This is especially true when you expect the person to outlive you.
If one of your heirs or executors proceeds you in death, this person can no longer fulfill this role.
You will need to select a replacement beneficiary or executor.
The aging of generations.
Your parents or a sibling may have been the wise choice to serve as the executor of your estate.
If you are experiencing the effects of aging, likely they are as well.
When this happens, your adult child may be better suited to manage your affairs.
The passage of new laws.
This past year is an example of how tax laws can impact your planning.
Both the SECURE Act and the CARES Act address issues related to estate and retirement planning.
You should update your last will to reflect these new laws.
The receipt of an inheritance.
Whenever you receive a large sum of money, your tax liability is likely to change.
Estate planning needs vary greatly depending on income or assets.
You will want to review your plan to ensure it is tax efficient.
The loss of a will.
Sometimes documents disappear.
This can occur if you simply cannot find the original last will.
In other cases, legal documents may be lost in a fire or natural disaster.
In this case, you will need to create a new last will and include language revoking any prior last wills.
After doing so, be sure to store it somewhere safe.
A move out of state or country.
Living abroad can be appealing in retirement.
For others, jobs take them overseas or to other parts of the country.
If you own property in multiple states or countries, you may need to do planning for each jurisdiction.
Talk to an experienced estate planning attorney about your specific circumstances.
Contention among loved ones.
Your family may not like your friends.
Your friends may not like your family.
Heck, your family may not like your family and your friends may not like your friends.
Life can get complicated.
Legally, your friends have no right to your estate.
Often this means, family will win an estate battle.
If your are leaving assets to your friends, it may be wise to place a “no contest” clause in your last will to help deter them from bringing a challenge in court.
Because estate planning can have a lasting impact on finances, friends, and family, it is important to regularly review and update your will.
Reference: Kiplinger (May 26, 2020) “12 Different Times When You Should Update Your Will”