Even if you have a valid will, you may need to draft a new one for a variety of reasons. A will is an essential part of planning for the future.
But don't think creating a will is a one-time proposition. Here are seven reasons to strongly consider updating your will:
- Deaths: If individuals named (as heirs or executors) have died or they become incapacitated, a will should be reviewed to ensure changes are not needed.
- 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.
- 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, a spouse may receive one‑third to one‑half of the estate, absent any other directions. 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.
- 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.
- Births: Once parents have children, you may want to consider updating your will to include the names of children. Also, you want to name guardians to care for the children in the event the parents die prematurely. (However, the naming of guardians is not binding by the probate court.) Grandparents might wish to draft a new will concerning the distribution of assets after children are born. Again, the use of a trust may be recommended.
- 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 may consider a power of attorney that enables someone else to act on their behalf in the event of certain illnesses.
- Tax law revisions: The Internal Revenue Code is regularly changed. In fact, the estate tax rules have undergone significant changes in recent years and more changes could occur. A will should be reviewed to take advantage of maximum tax benefits that exist today so it may have to be updated if tax laws change.
In some cases, a will might be amended with a "codicil." However, in many cases, it is best to draft a new will. We can guide you on how to proceed.
Our estate planning team is led by Tammie L. Yearwood, CPA, who has more than 17 years of experience in estate planning. Tammie’s areas of specialty are estate, trust and gift tax compliance, including estate and trust planning, fiduciary accounting, estate administration, and individual taxation. She is a CPA in Pennsylvania, New Jersey and New York.