Life has a way of changing rapidly, causing yesterday’s well-devised estate plan to become outdated. When any of the following events occur in your life, you should review your plan immediately.
- Marriages. If you marry, you will need to change your will and/or your revocable trust, among other things. The marriage of your children might also cause you to consider changes.
- Births. If you have a child, you should review your will and/or your revocable trust and other documents. Most wills and revocable trusts provide that all children are automatically included whether or not they are specifically named in the document. For sentimental reasons, however, many parents want each child listed by name. Some situations—such as a child with special needs—may call for unique attention. Also, the birth of a grandchild may cause you to make additional provisions in your plan. You may want to make a general bequest to pay for a prefunded college education plan.
- Divorces. If you get divorced, you will need to rewrite your will or restate your revocable trust. Virtually all states nullify an ex-spouse’s rights under a will. But there are many other considerations, including the removal of your ex-spouse as the personal representative (executor) and as trustee, as well as removing your ex-spouse as the beneficiary of your life insurance, retirement plans, and other employee benefit plans.
- Inheritances. If you or a family member inherits a large sum of money, you may want to change your plan.
- You win the lottery. Yeah…I just had to put that one in here. Someone has to win it, right?
- Deaths. If a spouse or child dies, you need to review and consider changing your plan. You will need to do likewise if someone designated as personal representative, or trustee dies.
- Career changes. A simple change of career may necessitate changes to your plan. For example, your new job may offer substantially more or less life insurance. If you have business interests that change significantly, your plan should again be reviewed.
- Moves out-of-state. The laws of different states can vary widely, resulting in undesirable interpretations of your will.
- Changes in the tax law. Congress seems compelled to make significant changes in the law every couple of years. This often results not in better laws, but busier lawyers, accountants, and financial advisors. For example, in 1913, the income tax law was a total of 14 pages. Today, the law has expanded to more than 10,000 pages, including more than 16,000 changes in code subsections over the past 30 years! Is it any wonder that taxpayers are confused and frustrated?
- Changes in estate values. If the value of your estate rises or falls significantly, you should review your estate plan.
These are just some of the major events that should prompt you to review your estate plan. Even if you feel your facts have not changed at all, you should review your estate plan every three to five years at the very least. If you do decide that changes are appropriate, then you have two choices. For relatively minor changes, you can have your lawyer draw a codicil to your existing will or an amendment to your revocable trust. A codicil is, in effect, an amendment to a specific section or item in your will. The codicil must be witnessed using the same procedure as your will. Your other alternative is to rewrite your entire will, or restate your entire revocable trust. Although this may seem to be an unnecessary complication, many lawyers prefer this method because it reduces the chance of overlooking conflicting language and instructions in your will. You can imagine the potential trouble if over the years you add several codicils. Often, your lawyer will maintain a digital copy of your will so that the cost of redoing it is not significantly different from drawing a codicil (but don’t forget to ask about fees!). If you do rewrite your will, be sure to destroy your old original(s) and all copies.
By the way, if you have adult children, be sure that they have executed durable powers of attorney and medical powers of attorney. We, at the Law Office of Brian Budman, P.C., have made this relatively easy for you to do. Please see our Free Resources page