Tax Tips
Is It Time to Update Your Will? - October 2005
Richard Scrivanich - Partner
Preparing a will is the best way to be certain your property is distributed according to your wishes, but keeping that will up-to-date is essential. You should review your will periodically, especially when there are changes to personal circumstances, your financial situation, or the tax laws. Here are some situations that should trigger an immediate review of your will:
-
Marriage, divorce or remarriage. These life events can have a major impact on financial planning documents. For example, if a widow or widower remarries, it is important that the will is updated to show how the children from the previous marriage and the new spouse should be provided for.
-
A new heir. Updating a will is especially important when you have a child, because your will allows you to name a guardian to care for your child in the event that something happens to both you and your spouse. If you don’t name a guardian for your child, the courts will appoint one.
-
Death of someone named in the will. The death of a named executor, guardian, beneficiary, or trustee signals a need to make changes to those provisions in your will.
-
Substantial increase or decrease in net worth. If you get a large personal injury settlement, or receive a large inheritance or other unexpected windfall, additional tax planning might be necessary to minimize the tax bill on your estate. On the other hand, a significant decline in your financial assets might dictate altering you specific bequests or making other modifications.
-
Relocation to another state. If you relocate, you should have an attorney in the state of your new residence review y lour will. This is especially important if you move to or from a community property state. Although all states recognize a will that was properly created in another state, there may be nuances that need to be addressed.
-
Tax law changes. Updating your will allows you to take advantage of recent developments and new techniques in estate planning. With the estate tax exemption scheduled to change a number of times between now and 2011, and the prospect of future changes, it’s more important than ever to review your will on a regular basis.
-
Changes to your intentions. Whether you want to add a new beneficiary or charitable donation, or you’ve had second thoughts about your executor or the guardian of your children, be sure to implement these changes on a timely basis. If your revised intentions do not make it into print, they will have no legal effect.
-
How to change your will. You can’t just make changes on your will. While every change doesn’t necessitate redrafting, marking your will up invalidates it completely. In the past, changes were made by creating an amendment call a “codicil,” which, to be valid, has to be signed and witnessed like a will. A codicil supplements your will and can modify, further explain, or add to, delete, or amend provisions in the existing document. However, in the age of word processing, it is much better to redraft, sign, and witness a new will.
-
Keep it safe and current. Once you have signed your will, keep it in a safe place, such as a safe deposit box, and be sure that your family members know where to find it. You should keep a duplicate unsigned copy handy and review it periodically to see if any changes are needed.
Reviewing your will is an important part of the estate planning process, and a process that will ensure that it is in alignment with your financial and estate planning objectives.
If you have any questions regarding updating your will or any other tax matter, please feel free to give me a call at (562) 698-9891.
Return to Tax Tips Archives
All rights reserved. For personal use only.
Do not duplicate or distribute without permission. All information in this
article is for informational purposes only.
Some of the articles included here were written in a prior
year or before a current tax law change. Therefore some of the information in
the older articles may not still be valid. Any dollar thresholds indicated
relate only to the year for which the article was written and could be different
for the current year. Please discuss with us your personal situation before
acting on any of the information provided. If you have any questions,
please give us a call at (562) 698-9891.
|
