If you have a will, you're definitely ahead of the game when it comes to providing for your family down the road as well as making sure they don't have to struggle when dealing with your estate. But wills are not one of those documents where you can write it and forget it. Making some revisions, also known as creating a "codicil," may be necessary as you go through life changes. If you're not sure it needs to be done, here are four of the top reasons why you may need to examine and change your will.
Change in Relationship
Anytime there's a change in not just your relationships but also the relationships of your heirs, it's a good idea to review your will to see if modifications are in order. Getting married or divorced are the more obvious reasons, but you need to think about how other people in your family could be affected when their relationships change, too. For instance, if one of your heirs gets married and has children, you may wish to add your niece or nephew as a beneficiary.
Your relationships can change in other ways, too. Someone who was once a close personal friend and is supposed to inherit your jewelry may not be a part of your life anymore. Or you might have developed a passion for a certain charity in recent months. When you go through your will, look at all of the parties and consider whether their circumstances have changed to determine if their involvement in your will needs to as well.
Change with Your Assets
If you have real estate and personal property, have they increased or decreased in value? If so, this could impact estate taxes, if any exist in your state. Also, if you've made any purchases or sold property that was listed in your will, these are things that need to be adjusted. Investing in life insurance or a pension plan are two major things that you can now add beneficiaries for in your will.
Tax Law Changes
Laws change all the time, and making sure that those changes are reflected in your will is vital to ensuring that your heirs don't have issues with your estate.
For example, there are a handful of states that have an estate tax that must be paid when property passes to your heirs, and the amount of the tax is usually calculated based on the fair market value. Washington currently has the highest estate tax rate, and Nebraska takes the lead for charging the most inheritance taxes. But a lot of states have been in frequent battles over the years to change these laws, as they are deemed to be overly burdensome. Tennessee is one in particular who was recently able to get rid of estate taxes altogether after 2016. And Minnesota is in the process of doubling the exemption amount from $1 million to $2 million.
Your attorney can guide you in how these changes in the law can affect your decedents and how to plan for that.
Moving out of State
This is one major life change that most people don't realize could affect what happens to their estate. Because individual states are given authority to govern how wills are handled, you should consult with an attorney where you move to see if any adjustments are in order.
For example, some states allow for minors to have a valid will, while most require that testators be at least 18. Also, handwritten wills with no witnesses (holographic wills) are allowed in only three states: Idaho, Maine, and Montana. If you live in Arkansas, a holographic will is considered valid only if three people who are not a part of the will can verify your handwriting and signature.
An attorney, such as those at Leon J Teichner & Associates, P.C., can let you know how often you should review your will based on your individual circumstances, but it's a good idea to glance it over when you do your taxes, just so it becomes a habit.