The Danger of Not Reviewing Your Will

old willI cannot tell you how many times I hear people tell me “I already have a Will. I don’t need your services.” That statement might be correct, but often people don’t recall exactly what is in their Will. That’s why it is essential that people review their Will whenever a major life event occurs or at a minimum, every four or five years. It amazes me how many people forget that they designated Uncle Jim to be the guardian of their children and Uncle Jim is now in jail for drug violations, or they gave grandma’s jewelry to a niece and they now have their own daughter who they would prefer to have it. These are just a few examples of things we forget unless we periodically review our Will.

So, how do you go about making changes to your Will? The answer is that it depends on the types of changes you want to make. If you need to make a minor change, like adding a specific bequest or updating the last name of a beneficiary who’s gotten married, then you may want to use a Codicil. A Codicil is a legal document that changes a specific provision of a Will, while leaving all of the other provisions exactly as they originally were. A Codicil needs to be signed and witnessed with the same formality as your original Will, so you’ll need to get the help of your estate planning attorney.

On the other hand, if you need to make a big change to your Will, such as disinheriting one of your beneficiaries; or if you need to make several small changes, you’ll likely want to have your estate planning attorney draw up a new Will for you to sign. This will make it easier for your executor to follow your intentions when the time comes to probate your Will and distribute your assets.

The easier your Will is to read and follow, the less likely a Will contest becomes, saving time and money during the probate process. There is no hard and fast legal rule that dictates when a Codicil should be used as opposed to when a new Will should be made. However, if one of the beneficiaries in your Will is likely to receive something of less value after the Codicil is executed there are some attorneys who believe executing a new Will is more likely to ensure your new wishes are fulfilled than if you simply execute a Codicil. If there’s any doubt, the best thing to do is to check with a qualified estate planning attorney.

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Four Key Reasons to Have a Will

The question occasionally arises at a social event when someone introduces me as an attorney who helps people with their estate planning. “I don’t really need a will, do I?” Here are some thoughts on that question.

old will1. Children – If you and your wife should die before your children are of legal age, your children will need to have a guardian appointed for them. If you would like to tell the court who you think that should be, you can do so in your will. Otherwise, the court will make a decision without your input. If any of your children have special needs, it is critical that you include a special needs trust for any inheritance that child might receive so they don’t lose their government benefits.

2. Distribute your estate as you wish – If you don’t have a will when you die, much and possibly all of your estate will be distributed according to the laws of the state where you live. Those laws usually follow a traditional distribution for the traditional family. For example, everything to spouse if this is the first marriage and children of only this marriage. But if you have a non-traditional relationship (for example, multiple marriages, children of different wives, no marriage, etc.) the distribution under state law is likely to be far different than you desire. You can avoid this by preparing a will that contains your wishes.

3. Minimize family disputes – No amount of planning can guarantee someone won’t contest the distribution of your estate. But good advance planning can help minimize such disputes and help ensure the outcome will be as you desire. Even with good advance planning, the best way to avoid family disputes is to communicate your wishes to your family while you are still living. The more often your wishes are discussed with everyone involved, the better.

4. Reduce expenses – If you die without a will and probate of your estate is required, you are very likely to have to get approval of the probate court for every action needed to distribute your estate. That means multiple pleadings and hearings, which translates into fees and expenses. Much of this can be avoided with a properly prepared will.

These are general reasons for planning that apply to most everyone. Depending on your situation, there may be numerous other reasons why you should have a will. The wisest course for estate planning is to retain and follow the advice of an attorney licensed in your state of residence and experienced in estate planning and probate law.

Posted in Community Property, Estate administration, Estate Planning, Guardianship, Probate, Special Needs Trust, Wills | Tagged , , , , , | Comments Off

When to Update Your Will or Trust

Friends often ask me whether they need old willto update their Will or Trust. Or the other side of that is the people who just don’t want to be bothered and say, “We already did our Wills” or “We already have a Trust.”

So when should you update your Will or Trust?  The same rules apply to both, so I’ll just refer to a Will for the remainder of this post.  I tell people there are several times when that should be done. Obviously, if you have changed your mind about who you want to receive your estate when you die, you should change your Will. But you should also revise your Will if you discover one of your beneficiaries is not handling his or her finances well or is now married to someone who doesn’t appear to be able to manage finances well or they appear to have debt problems where creditors are coming after them or are likely to do so. Provisions can be added to your Will (and to a Trust) to place their inheritance in a trust or add other protections.

If you are in the midst of a divorce or have been divorced since you last did your Will, you should review your estate planning documents. The law on how divorces impact the distribution of your estate varies from state to state and over time. The type of assets you own will also be a factor in how your estate is distributed.  And you need to consult with your divorce attorney to determine what you can do under the court’s orders and when you make changes to your estate planning documents.

Over time laws change. For example, the size of estate you have before you owe federal estate tax has risen significantly over the past couple decades. When that threshold was low, people would often have complex trusts in their Wills to help minimize or avoid estate taxes. With higher thresholds many people no longer need those complex trusts to minimize or avoid estate taxes. So your Will may not be very old, but without changes it might impose rather complex requirements on your executor and your estate, even though those requirements are no longer necessary for your estate.

Other laws have been enacted fairly recently that impose strict guidelines on the disclosure of “protected health information” without the patient’s explicit permission (the law is often referred to as HIPAA). While these privacy protections are a good thing, they can also become problematic if your executor, trustee or agent (under a durable power of attorney) needs to deal with your employer, insurer or medical providers such as doctors, clinics and hospitals. Because of this law, to act on your behalf, an authorized person must have a written document executed by you, with very specific language mandated by HIPAA. If your estate planning documents were executed before the mid-1990s or even as late as the mid-2000s, you may not have this language included among your estate planning documents.

In summary, if you have estate planning documents, chances are they remain “valid” and could be used to probate your estate. But depending on their age they may not contain the most appropriate terms under current law and may result in added complexity and expense for your executor, trustee and agents. If you have experienced a change in your family life or it has been more than five or six years since you last executed your estate planning documents, you should make an appointment to meet with your estate planning attorney to review your situation.

Posted in Advance Directives, Community Property, Divorce, Estate Planning, Estate Tax, HIPAA, Inheritance, Power of Attorney, Probate, Trusts, Wills | Tagged , , , , , , | Comments Off