Friends often ask me whether they need to 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.