When it comes to a will or estate plan, don’t just set it and forget it
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Some obvious factors that could prompt you to make a will update include changes in marital status or your health. Financial planners and lawyers advise that there may be some more subtle triggers.
Philip Herzberg of Team Hewins Miami, a certified financial planner and lead financial advisor, said, “Your will should always be updated whenever your personal circumstances change.” The will of a person is just like a house. If it’s well maintained, you can enjoy it for many years. [it]They will last for a long time.
He said, “Similarly, it is possible to have a longer life span if your will is properly updated.”
Herzberg stated that changes in health can have a significant impact on planning and tax strategies.
He stated that each state has its own law regarding administration of a testament. For example, the laws governing where an executor must reside, how inheritance tax is calculated, and whether or not a child may be disinherited through omission vary from one state to another.
Freeborn’s Chicago estate planning attorney Michael D. Whitty said that clients should revisit their wills and powers every five year. These events should be documented.
An important change in the economic situation, and whether or not estate taxes will be applicable.
A change in parental status. This is typically when the child becomes a parent. Many wills include language that automatically includes any children adopted or born after the instrument’s date. Except for updating guardians, additional children don’t necessarily require the updating of the document.
There are changes in the fiduciary roles (executor or successor trustee of a trust, attorney,-in-fact and health-care agent; guardian for minor children). Your initial choices in fiduciary roles may change over time. The roles are no longer appropriate for parents as they age or become disabled. Siblings and friends experience changes such as marriage, moving and starting new families.
Family members’ situations may change, like if a child has special needs. You will need to plan accordingly.
Overlooked Triggers
Herzberg said that all consolidations in the banking sector are a trigger for updating your will. You may have a new executor if you’ve named a bank executor and the bank was bought or sold in recent years.
“Be sure you know who that person or institution is – and that you trust its judgment.”
CFP NadineMarie Burns, president, A New Path Financial Ann Arbor, Michigan says it’s crucial to revisit beneficiaries after divorce or marriage.
“States have different ways of handling marriage in life insurance, and beneficiary treatment,” she stated. A lot of times, the beneficiary will end up trumping a will.
Burns remembered that one of her clients’ divorced, remarried father died. Although he hadn’t updated any beneficiaries, the state laws overturned him and all his insurance and property were given to his new spouse.
He claimed that nothing went to her daughter. “He had listed his ex-wife as a beneficiary on the life insurance … and listed no contingent beneficiary.”
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