Reasons to Change Your Will
Many assume that once they create their will, it can sit in a lawyer's office or at a bank in a safe deposit box for years. They never think it is necessary to revisit the document or update it with major life changes and milestones. It is quite possible that changes in your life circumstances or in the laws of your state have made your will not as flexible, accurate, protective, or clear as it may have originally been.
There are several life milestones or events that should trigger an update or potential change to your will (at a minimum, a revisiting of the will to ensure its continued accuracy and appropriateness).
You Move to a New State
The laws are different in each state regarding the execution of a will and requirements for same, as well as case law that applies to disputes over interpretations of will provisions. A trust that may be valid in one state may be voided or voidable in another state. A divorce may revoke a party's will automatically, or at least provisions that relate to a former spouse. It is important to have counsel in your state of residency with trusts and estates experience to assist in preparation or review of your existing will.
Tax Laws Changed
If federal estate tax laws or state inheritance laws change, provisions in a will may become obsolete or invalidated. Your will should reflect changes in tax legislation. Otherwise, your heirs and beneficiaries may be responsible for hefty tax burdens and consequences of your obsolete will or provisions. In some years, you could leave only half of your assets to a spouse without incurring federal estate taxes. In later years, you could leave a spouse with an unlimited amount of your estate without triggering any estate taxes or gift taxes. Your spouse's financial stability and security could vary significantly depending on the year a will was prepared or whether it was revisited and updated.
Whether you get married for the first time or a subsequent time, you still must revisit your will. You have to specify what you want your spouse to receive if you want your spouse to receive more than the share determined by the government in instances when there is no will. Otherwise, the rules of intestate succession will govern, and your spouse will get less of your estate and the government will get more in taxes. Usually, the government determines that a spouse will receive no more than one-half or one-third of your estate, barring a specific gift to the contrary.
In some jurisdictions, divorce revokes part or all of a party's will automatically. It is best to remove mention of your former spouse and to update your beneficiary designations. You may want to revise your trusts, so that an ex-spouse is skipped in favor of benefiting children.
You Have Children
Once you have a child, you should amend your will to include the name of the guardian you designate for the child. You need to designate a back-up guardian. If you want your child to share in your estate, you also need to include the child in your gifts and devises in the will.
You Are Close to Retirement
As you age, you may desire to revise some will provisions. You may decide to use a durable power of attorney that designates someone to make health care determinations. You may want one of your children to act on your part if you are not competent to make legal and/or healthcare decisions.
You Sold a Major Asset
If you sold your home or business, you need to make sure the asset or proceeds are appropriately mentioned and included in the will. You do not want to gift the house to a family member in the will when you have sold it, and then create a situation where one family member receives nothing and others receive a disproportionate share of your estate, unintentionally. This is true for gifts to children who are siblings.