Life is full of changes that can sometimes have long lasting legal impacts. Some life events can impact your existing estate plan and may require you to make updates accordingly. It is important to review and potentially make updates to your Will when a significant change occurs to ensure that your Will carries out your current wishes appropriately. This post will explore some examples of life events that signal an update to your Will may be needed.
Financial Status
One life change that doesn’t take much explanation is a change to your financial situation. Whether you are planning to sell your business or have experienced significant financial hardship, it is critical that your estate plan align with your current financial situation. Other changes could include an increase in debt, changes in investment type or makeup, or a net worth increase. This is particularly important if your estate plan includes any specific gifts of cash, real estate, or other assets.
Change in Beneficiaries or Family Status
A beneficiary is a person or organization that you want to be given money or other assets after you pass. As a very basic example, if you have a beneficiary in your Will that you no longer wish to include, you must either have a new Will or a Codicil to your existing Will prepared for you. A less obvious example is a beneficiary who may have started receiving government benefits since your Will was written. If a person with means-tested government benefits inherits a sum of money outright, that gift can make them lose their benefits. Yet another reason to reconsider the makeup of your plan might be a beneficiary’s difficult marriage or other personal situation; you may be more comfortable with leaving that person’s share in trust for them rather than as an outright gift.
Getting a divorce is also something that requires an update to your Will and overall estate plan. Indiana law does provide some backup protections if a former spouse is still named in someone’s Will; however, those protections do not apply to ex-spouses listed as beneficiary of a financial account. For example, assume your ex-spouse is listed as the primary beneficiary of your IRA or 401(k) and you never update it. If you pass first, would you want your ex-spouse to inherit your retirement account nest egg? Probably not. This is why it is critical to update your Will and overall plan after any change in marital status.
Moving to a New State
Since probate laws are state laws, moving to a new state can impact how your Will would operate. Provisions in your existing Will may not comply with the new state’s law. This could be the case both for administrative provisions and for resolving any questions of interpretation of the gift provisions. Therefore, immediately after moving states be sure to have an attorney in the new state review your Will to ensure your wishes remain enforceable, or to prepare a new Will if necessary.
Changes to Property
Changes to ownership of property may trigger a need to update your estate plan. Purchasing a vacation or investment property in another state is a clear example of a need to check in with your estate planning attorney. If your current estate plan does not account for out-of-state property, your heirs may end up with two estates to administer – one in your home state and a second (called “ancillary”) administration where the other real estate is located. That means more time and expense for them that could have been avoided.
In summary, big financial changes, changes in family dynamics, and changes in property ownership all should be earmarked as a reason to at least call your estate planning attorney to check in. An update to your Will may or may not be required, but it is best to err on the side of caution and ask your attorney whether they recommend any changes. When in doubt, keep your attorney updated so that they can give you the right guidance to ensure that your plan will be carried out according to your wishes.