Wills Must Keep Up With Life Changes
A will is an essential part of planning for the future. But don’t think creating a will is a one-time proposition. Even if you have a valid document, it may need to be updated for a variety of reasons. For example (this also applies to living trusts):
1. Deaths - If individuals named (as beneficiaries or executors) have died or they become incapacitated, a will should be changed.
2. Assets - Revisions may be needed if the value of assets has increased or decreased significantly, or they are no longer owned. For example, if you specifically leave your home to one of your children, and later sell it, you may want to change the distribution of your other assets.
3. Marriage - Wedding bells usually signal the need to review a will. Which assets should pass to your spouse? Are step-children involved? If this is not spelled out in a will, the state will decide. In a community property state, a spouse automatically inherits half of all community property. In most other states, such as North Carolina, a spouse may receive one third to one half of the estate, absent any other directions.
Where Is It?
Before it’s too late, people should let someone knowwhere their original will is stored. If one can’t be found after a person dies, a court may decide it was destroyed. It’s a good idea to keep a copy in a safe deposit box, but don’t put the original there without checking state law. Some states require that safe deposit boxes be sealed after the renter dies. In North Carolina it’s relatively easy to access the safe deposit box.
Other options include:
Store an original will in the office of the county Clerk of the Superior Court. (It is retrieved if the person moves.)
Have your attorney retain the original will. Ask them what will happen to the document if they die, move, or quit practicing.
Store the will at home. Of course, it could be lost, destroyed or discovered by an interested party who could deliberately destroy, conceal, or alter it.
Also, keep in mind that an unmarried couple living together may want to leave assets to each other but in order to make an inheritance happen, it must generally be spelled out in a will.
4. Divorce - In many states, a divorce automatically revokes a will or those provisions concerning an ex spouse. As a result, if you get divorced, it’s best to have a new will drafted. For instance, you might have your former spouse removed as a primary beneficiary. In addition, you may want to change the beneficiary of your life insurance, pension or any existing IRAs. Consider the use of a trust if children from a previous marriage are involved.
You may also want to change your will if one of your children gets divorced.
5. Births - Once parents have children, their wills should be amended immediately to include the names of guardians to care for the children in the event the parents die prematurely. Also, parents or grandparents might wish to restructure their wills concerning distribution of assets after children are born. Again, the use of a trust may be recommended.
6. Retirement - This event may also trigger the need to make changes to an existing will. For example, many retirees sell their homes and move to other states. But state laws can vary widely. Furthermore, individuals should consider a power of attorney that enables someone else to act on their behalf in the event of incapacity.
7. Tax law revisions - The Internal Revenue Code is regularly changed. In fact, many aspects of estate tax planning are in flux right now. A will should be designed to take advantage of maximum tax benefits that exist today so it may have to be updated as tax laws change.
You don’t have to tackle this problem on your own. If you need to update a will or living trust, rely on your estate planning attorney to guide you. And don’t delay – the financial and other consequences for failing to act could be significant.