Life is a constantly evolving journey. Laws change. People change. Relationships change. Finances change. Children come along, attend college, become adults, have their own children, and grow into their golden years. Unfortunately, the language in a Will stays the same and may fail to accomplish your goals if not updated to parallel the evolutions of your life.
So, once you have taken the sensible step of meeting with an experienced estate planning attorney and executing your Last Will and Testament (likely including a Trust Agreement, Durable Power of Attorney, and Appointment of a Healthcare Representative), how often should you update your Will and related estate planning documents?
Rule of Thumb is Every Three to Five Years
As a rule of thumb, you should review your Will and Trust documents with your estate planning lawyer at least once every three to five years to make sure that they still comply with your goals and any changes in the law. Additionally, other situations may arise for which you should update your Estate Planning documents without delay. The following are some of the common situations that necessitate you visiting your estate planning attorney to update your Last Will and Testament to accomplish your goals.
Marriage or Divorce
Whether a person is starting or ending a marriage, either event will have a significant legal impact on the person’s estate plan. Additionally, marriage or divorce will most certainly change a person’s goals for the ultimate disposition of property. State laws affect the terms of a Will by giving an omitted spouse some share of your estate, which share is unlikely to match your intentions. In the event of a divorce, state laws will treat your spouse as if predeceased, but this might not apply to certain beneficiary designations on assets that pass outside of the probate process. In either case, you should update your estate plan to make sure your property goes to your loved ones.
Birth of a Child
The birth of a child is a wonderful event, but it also creates the need to protect your child if something were to happen to you. Who would serve as the guardian of your child or manage your child’s money during minority? Who will pay for your child’s education? If you have more than one child, does your will include your newborn in the disposition? Should you update beneficiary designations now that you are a parent? These are all typical concerns you should address in your estate planning.
Child No Longer a Minor
Children’s needs change as they grow older and become more responsible. You may want to reevaluate who you have named as the executor under your Will or the agent in your other estate planning documents. The person you have named may no longer be a good candidate for the administrative burden of being an executor because of age or infirmity. Your child may now be a better choice to be your executor. Moreover, now that your child is an adult, you may want to evaluate whether a trust for a minor is still necessary, or whether the child now needs a different trust for asset protection in the event of credit problems, divorce, or lawsuits.
Empty Nest
Have you sold your home and relocated or downsized to suit your changing needs after your children have all moved out? Does your Will specifically devise your former home to one individual? Do you now own a vacation property in another state? Are you considering adding your children to your deed? You should review these issues with your estate planning attorney to make sure your Will, Trust and beneficiary designations accurately address these issues and your estate plan does not encounter any unforeseen obstacles. Placing a child on a deed can affect real estate tax abatements, capital gains taxes, and government benefits. Additionally, you want to simplify the process for your family and avoid the need and expense of an ancillary probate process if you own real estate in other states.
A Change in Net Worth
Has your net worth significantly increased or decreased since you executed your Last Will and Testament? If so, you should update your Will to add tax saving provisions or remove unnecessary tax provisions to simplify your Will. The current estate tax exemption in Connecticut is two million dollars. With proper planning a married couple with over two million combined net worth can protect up to four million dollars from estate taxes. For a couple worth three million dollars, the savings could be over $70,000!
A Spouse, Child, or Executor Passes Away
You executed a Will to address the inevitability of your passing. Although it is heartbreaking to consider, you may outlive a spouse, child or another loved one who is named in your Will as either a beneficiary or an executor. You should update your will to make sure you control who will fill these vacancies in your Will.
Spouse or Child Applying for Medicaid
If you or your spouse or your child is in need of Medicaid assistance in the near future you should update your Will to make sure you don’t inadvertently disqualify them from getting assistance. Meet with an experienced elder law attorney to review the allocation of your assets and make sure that you, your spouse and your children are protected to the maximum extent permitted and not left impoverished by the need for medical assistance.
Purchasing a Home with a Person Outside of Marriage
Cohabitating with a person outside of marriage can create problems for your estate plan. If that person is not related to you by blood or marriage, then they have no right to inherit from you or serve as your healthcare proxy. If you live with a person and buy personal property and real estate together you may need to separate that property at some point because of a change in the relationship or the passing of your partner. How do you determine who owned what? Do you want your partner to inherit from you? You should consult a lawyer to document your wishes while your relationship is strong and cooperation is likely.
There are many reasons to update your Will and estate plan. Don’t hesitate to contact the estate planning attorneys at Cipparone & Zaccaro, PC to keep your estate plan current.
