(And Other Related Estate Planning Documents)
While many of my clients seek out my services because they don’t have any estate plan in place, just as many others are looking to update documents that were executed at an earlier time in their lives. As we walk through different phases of lives, our personal financial status, family dynamics, and priorities shift. It’s important that you periodically review your previously executed Wills, Trusts, Medical Directives and other Estate Planning documents to ensure they are up-to-date and accurately reflect your current situation. Keeping these documents current can be an inexpensive way to ensure that your loved ones avoid a costly and complex estate administration process once you have passed away, and that your wishes are carried out as you intend. Here are my “Top 10 Reasons to Consider Updating Your Will:”
1) The Acquisition of New Assets or A Change in Your Financial Status
When you put together an Estate Plan, it is based on a snapshot of your financial position at the time the documents are drafted. As you move on in life, your financial status is likely to change (hopefully for the better!). People acquire more assets as they age – financial, real property, valuable family heirlooms, etc. On the other hand, sometimes as people age, they get rid of their assets. Perhaps you have downsized your home, given away lifetime gifts, or sold some of your valuables. You should consider updating your Will, or even putting together a Trust, if your assets have increased or decreased significantly, to ensure that your estate plan properly reflects your current financial status. As your wealth increases, you should adjust your plan to ensure your assets are protected, and that you are properly taking advantage of current tax laws and other estate planning tools that are available.
The union of two people in marriage brings rise to the need to put together new Wills for each partner. In most jurisdictions, individuals have certain legal rights to inherit at least a share their spouse’s estate. In addition, both sides bring assets to the marriage that can either maintain their status as individual property, or be re-defined as marital property. Most people prefer that their spouse serves in important roles such as Executor, Trustee, Medical Agent and Power of Attorney. Every couple should execute an estate plan very soon after they are married. This is especially true if one or both partners were previously married, or are bringing children into the family. In most cases, the estate plans for married couples are developed together so that common goals are carried out.
If you’ve been divorced, it’s critical to update your estate plan right away! Once divorce proceedings are settled, your assets are re-defined and need to preserved. Your former spouse likely serves in roles that you may want to assign to another family member or trusted friend. If there are children, you will need to carefully plan for their guardianship in the event that something happens to you or your former spouse.
4) You’ve Had Kids
Once you add children to your family, it’s extremely important to have estate planning documents in place that provide for both their financial and personal security if something should happen to you – especially when they are minors. A plan should be in place to ensure that your assets are protected so they can be used for the welfare of your children, and, of course, that the proper individuals are selected to care for your children in the event that both parents pass away before their children become adults.
5) Your Kids Have Grown
If your kids have reached or are approaching adulthood, you should review your estate plan for several reasons. First, to ensure the distribution plan for your assets still makes sense. Perhaps older children are more financially stable, while younger ones still need more of a helping hand. As their personalities and capabilities become more apparent, you will want to develop a plan that better reflects the current situation. Often times, it’s time to replace your parents, siblings and friends with your more mature children in the roles of Executor, Trustee, Medical Agent or Power of Attorney.
6) The Aging/Changing Status of Your Executors, Custodians, Trustees, etc.
One of the most important components of estate planning is designating the people in your life who will have significant roles in your estate plan. From choosing an Executor or Trustee to administer your estate, to designating legal custodians or guardians for your minor children, to choosing a loved one to care for you if you become disabled, it’s critical that the right people are in place. As time goes by, you might find that the people you selected are no longer appropriate for these roles. Perhaps they have passed away or aged, they no longer have the capacity, you’ve lost touch or had a “falling out,” or others (like your adult children) are now more appropriate.
7) Simplify your Estate Plan
I’ve had several clients recently approach me with a binder full of paper so large it hurts my back to carry. It’s filled with estate planning documents they have previously executed, they don’t understand, and don’t want to burden their loved ones with trying to figure out once they are gone. Sometimes it makes sense to revoke old estate plans and create simplified, streamlined documents that are easier (and less expensive) to administer.
8) You’ve Executed a “Form Will” (Legal Zoom, etc.)
Many people have gone to Legal Zoom or some other website to purchase a “Will Kit” to put together their estate plan. While these services can save you a few bucks in the short term, they can create more problems for you in the long run. First, they often are not compatible, or even compliant with the laws of the jurisdiction you live in and will have your estate administered in. In many cases, they are not properly executed, and easily challenged in the courts. Most importantly, these “one size fits all” solutions do not take into account your unique estate or take into account the myriad of issues that are personal to you, your family, and the make-up of your estate. Do yourself a favor and take the time to work with a qualified estate planning professional to update these form documents. It will save headaches – and resources in the long run.
If you’ve moved from one state to another, you should consider having your Wills and other documents updated. Each State (and DC!) has their own unique sets of laws that dictate the formation of Wills and other documents, as well as the administration of your estate. For example, all have different requirements for the valid execution of documents. Some are “community property” states, others have different procedures for child custody. Make sure your estate plan is compatible with the jurisdiction in which you reside.
10) Passage of Time – the Laws Change!
Finally, even if some of scenarios above do not apply to you, it’s always a good idea to have an estate planning professional review your Will and related documents from time to time to ensure your estate plan has not been impacted by changes to state law. Each year, state legislatures change estate planning laws to reflect the latest public policy trends, promote uniformity with other jurisdictions, adapt to new federal laws, or react to advancing technology. Make sure your Will is consistent with current laws – this might work to your advantage!
This, of course, is not an exhaustive list of scenarios that might create the need to update your estate plan, but rather some of the more common situations I confront in my daily practice. Many times, I will review documents and recommend only minor adjustments or no changes at all. The important thing to keep in mind is that your estate plan, although designed to last, should reflect the best possible outcome for your current situation – not some designated point in the past or future. If you think you need to update your estate planning documents, feel free to contact my office! I am happy to review your current plan at no charge, and make recommendations on the best course for your current situation.