A number of current and potential clients have asked me some great questions about their will or trust. For example: When should I update my will or trust? Once the document is signed, how long is it good for? At what point does it have to be revised?
There is no one right answer to these questions. While I recommend that clients review their will and trust annually, or at least every five years, this doesn’t necessarily mean that an update is required. Updating a will or trust has more to do with one’s circumstances than with timing. Here are a few reasons why it might be time for an update.
- Changes in tax laws. Tax laws are constantly changing, and there have been many changes in the last few years that impact estate planning. Some of them are good, like the law that raised the estate tax threshold to $5 million per individual (indexed for inflation). Some of them are not so good, like the law that severely limited the reassessment exclusion for property that children inherit from their parents. Good or bad, when the tax laws change it’s a good idea to update your will and trust to ensure your tax bill stays as low as possible.
- Changes in personal circumstances. Life continually changes, regardless of whether or not you want it to. Children are born, loved ones die, people get married or divorced, houses are bought and sold . . . these are just a few of the life changes that should make you think about your will and trust. If you experience a big life change, you should probably update your will and trust to reflect the changes in your life and circumstances.
- Changes in preferences. Perhaps your life hasn’t changed that much, but your preferences have. That person who seemed like a great choice for a trustee ten years ago isn’t looking so great anymore. Your children are now grown up and don’t need to have their money managed for them until they’re fifty. You wanted to remember a good friend with a cash gift, but you had a nasty argument five years ago and haven’t spoken since. There are many reasons why you might want to change who’s in charge and who gets what, but the change won’t take effect until you’ve made a formal update to your will or trust.
There may be other reasons to update your estate plan, but these tend to be the most common ones. If you are wondering whether your will and trust are due for an update, you are welcome to reach out to me at email@example.com.