Updating your will and estate plan is often not a pleasant task, but the decisions you make affect not only your life but also the people who will either benefit or have to address the details that may or may not represent what you wanted to happen after your death.
Let’s review an overview of wills and estate plans compiled by an elder law attorney and see what you might need to update.
Are a will and an estate plan the same thing?
No, but they are connected. An estate plan is a framework that can include a will. It is a legal document that describes the final wishes of the deceased so that his or her wishes can be handled the way they desired. An appointed executor follows the instructions of the will when it comes to how properties, possessions, assets, and business investments are distributed. The document can also designate assets to charities, institutions or organizations.
The will helps the family avoid disputes over property and makes legal decisions after death easier.
A common misconception is that having a will negates going to probate court. It does not according to Paul Gantner, an attorney at Amen, Gantner & Capriano. “If you’re not in probate, the will doesn’t mean anything,” he says. Paul describes the will as “the centerpiece document for many estate plans because it directs probate.” And he adds that probate court records are public information.
An estate plan goes even further than a will. It is a more intensive undertaking that uses various documents (including the will) to provide specific details. Some information in the estate plan dictates your requests while still living. One such document is called a living will (other documents that are valid during your life include powers of attorney for property and health care).
Many estate plans include a trust, which ensures that beneficiaries receive what they are entitled to, sees that the assets and property are distributed properly, avoids some taxes and fees, and provides protection to dependents. It is also not subject to probate court, so many estate planning documents are not made public.
If the will can be described as an outline of your wishes, the estate plan fills in more of the details and, according to Paul, is most often in need of updating.
There are many reasons to keep your legal documents current as your life changes. For example: designating the person you want to have financial power of attorney may have changed.
Paul’s law firm consults annually with their clients or their accountants and financial advisors. He recommends waiting no longer than a couple of years before looking at an update.
What are some reasons for updating wills and estate plans?
If you move to a different state after drawing up your will you may find that your current state has different rules and interpretations for wills. Paul cites one example of something as basic as how many witnesses are required to make the will valid: “Some states just require a witness, other a witness and a notary signature, and some two witnesses and a notary,” he says. “Many law firms go ahead and get the two witnesses plus the notary so the will is in compliance anywhere. And be aware, the interpretation of your will is done according to the laws of the state you are living in, not the state where you drew up the will,” he says.
Moving, however, is not the only reason to check up on your will. “If a person’s health or wealth has changed, or the health and wealth of people named in the estate plan is a factor, that should be documented,” Paul says.
Another reason for updating your estate plan or will is changes in tax laws. For example, in the 1990s exemption from an estate tax had a maximum limit of $600,000. Above that amount, an estate tax had to be paid. Today that limit is $11.4 million.
A change in finances—a dramatic increase or decrease in financial wealth—needs to be reflected in adjustments to money designated for beneficiaries. Also, if a beneficiary dies, or is added, or the amount to be received is changed for another reason it should be updated. Also, note any change in charities that would receive funds.
It is very important for your will and estate plan to be as current as possible if nothing else to avoid family squabbles that may crop up when there is a misunderstanding as to who should receive what. “I’ve seen people spend tens of thousands of dollars fighting over objects worth hundreds of dollars,” Paul says. “It’s all because Mom or Dad were unclear about what they wanted, and it became personal.”
The information above is for informational purposes only, and should not be construed as legal advice. This article is a brief overview of some of the legal and financial details and options available. There are many more options and issues to discuss and explore. Seek appropriate legal advice from a properly licensed attorney.
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