Yahoo Finance 4 Times It Makes Sense to Revise Your Will
If your will is collecting dust in a file somewhere, it might be time to pull it out and brush it off. Just as your life changes, so should your will. You may need to replace an executor, update accounts or adjust heirs. If you have a basic will, you may be able to draw up or revise one using software or an online template. However, those with greater wealth or needing more complex arrangements, such as trusts or guardianship provisions, may want to work with a professional estate attorney instead.
Even if you've already drawn up a will, if you're in one of these situations, it's a good idea to review your final wishes and make any necessary changes so your money and personal belongings are left in the right hands.
[See: 11 Money Moves to Make Before You Turn 40.]
1. You've experienced a significant life event. The most common time to adjust a will is when you've experienced a major change, such as a marriage, a divorce, the birth of a child or the death of a loved one. These changes may require new heirs be added to a will or others removed. These life events may also influence how assets are divided in the will. Someone moving to a new state should also update a will to ensure it adheres to the laws of that location.
However, there are other big life events that should trigger a review as well. People should consider updating a will after moving in with someone, even if they aren't planning to marry, says Barbara Taibi, a partner in the Personal Wealth Advisors Group of accounting firm EisnerAmper in Iselin, New Jersey. "The laws that protect married spouses will not protect your partner," she explains. Unmarried partners should be sure their wills stipulate what assets will pass to one another after death.
Paul Gaudio, a wealth planning strategist at financial firm Bryn Mawr Trust's Wealth Specialty office in Princeton, New Jersey, says that even the addition of an animal to the household should spark a review. "A lot of people forget about pets," he says. "As a dog owner, I always say there should be something in [a will] for pets as well." That's not to say an owner needs to leave a pet an inheritance, but rather should make accommodations for its care, such as designating a preferred new owner.
2. Someone listed in your will has experienced a significant life event. Wills not only list heirs but also include executors, trustees and guardians. These individuals may move, get married or become sick or disabled, all of which could change whether they are appropriate for the role listed in your will.
Plus, wills may have provisions to create trusts to support children or spouses after a person passes away. "You really want to look at the terms of these trusts," says Mary Ellen Hancock, vice president and senior wealth strategist at financial firm PNC Wealth Management.
Over time, the need for the trusts may change, or people may want to change their provisions. For instance, parents of toddlers might set up trusts to distribute money at age 20. However, once that toddler becomes a teen, it may seem better to delay disbursements to an older age. Trusts may also need to be adjusted should a child marry, a couple divorce or a grandchild be born.
[Read: 5 Estate Planning Strategies to Keep Your Money in the Family.]
3. The tax laws have changed. The wills of affluent individuals are often written in a way to minimize the effects of estate taxes. When laws change, the provisions of the will may need to be updated.
"We've been in this state of constant change as it relates to state and federal laws about estate tax," Gaudio says. Most recently, the federal government doubled the estate tax exemption. In 2017, $5.49 million of a person's estate was exempt from the 40 percent federal estate tax. Under the Tax Cuts and Jobs Act, $11.2 million of an estate will be exempt from the tax in 2018.
That change could mean that some families no longer need to worry about paying an estate tax and could eliminate the need for some trusts or other provisions in a will.
4. It's been three to five years. Even if there have not been any tax changes or you or a loved one hasn't experienced major life events, it's wise to review a will at least every three to five years and ensure all provisions are still in line with your wishes. Hancock says one thing to consider is how relationships with those listed in a will have changed over time. "Are you still in contact with these people?" she asks.
At the same time you're reviewing your will, don't forget to also review beneficiaries on bank accounts, retirement funds and life insurance. "Whoever you have as a beneficiary trumps the will," Taibi says. Double-check those names to ensure that, for instance, your life insurance death benefit doesn't go to a former spouse instead of your current one.
[Read: The Tipping Point: When Should You Write Your First Will?]
You've done a good thing by drawing up a will. Now, make sure that work doesn't go to waste by reviewing and updating the document periodically to make sure it reflects the changing landscape of your life. Once you have the will updated, be sure to store it in a secure location, such as fire-proof safe, and let your executor know where to find it. If an attorney drew up your will, that office will likely also be happy to store a copy for you.
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