Having a will is great, but think of it as requiring periodic maintenance. Schedule time, like maybe Groundhog Day, to update your will.
You should look over your will and other estate planning documents at least every few years unless there are reasons to do it more frequently. Some reasons to do it sooner include things like marriage, divorce, birth or adoption of a child, coming into a lot of money (i.e., inheritance, lottery win, etc.), or even moving to another state where estate laws are different from where your will was created.
I know that I have personal amnesia when it came to when I did something last, be it a dental checkup, physical, or estate planning review. In my mind, I just did it. What seems like a few years ago can be ten or twenty years.
CNBC’s recent article entitled “When it comes to a will or estate plan, don’t just set it and forget it. You need to keep them updated” says that one of the primary considerations for a review is a life event — when there’s a significant change in your life.
The pandemic has created an interest in estate planning, including a will and other legal documents addressing end-of-life considerations. Research now shows that 18- to 34-year-olds are now more likely (by 16%) to have a will than those who are in the 35-to-54 age group. According to a survey, in the 25-to-40 age group, just 32% do. Even so, fewer than 46% of U.S. adults have a will.
If you’re among those who have a will or comprehensive estate plan, here are some things to review and why. In addition to reviewing your will regarding who gets what, see if the person you named as executor is still a suitable choice. An executor must do things such as liquidating accounts, ensuring that your assets go to the proper beneficiaries, paying any debts not discharged (i.e., taxes owed), and selling your home.
Likewise, look at the people to whom you’ve assigned powers of attorney. If you become incapacitated at some point, the people with that authority will handle your medical and financial affairs if you are unable. The original people you named to take specific duties may no longer be in a position to do so.
Think about time and location. Who has a schedule to allow them to perform the duties you assign them? Do you want to do more now, so they have less to do later? Does geography matter when selecting who goes to the bank or the hospital on your behalf? Who took their time the last time you needed actual help with something? All new pieces of information to consider.
Some assets pass outside of the will, such as retirement accounts, like a Roth IRA or 401(k)plans and life insurance proceeds. As a result, the person named as a beneficiary on those accounts will generally receive the money, regardless of what your will says. Note that 401(k) plans usually require your current spouse to be the beneficiary unless they legally agree otherwise. Coordinating those benefits with your will or trust is “Where the rubber meets the road” for estate planning.
Also, the amount of time your beneficiary has to withdraw retirement funds has been shortened to 10 years for most beneficiaries except spouses. If you have a considerable amount in such accounts, you should talk to your financial advisor about strategies to deal with the resulting income taxes.
Regular bank accounts can also have beneficiaries listed on a payable-on-death form obtained at your bank.
If you own a home, make sure to see how it should be titled so it is given to the person (or people) you intend. If you want the house to pass through probate, the will should work fine but can be an expensive choice. Trusts or deeds can cost effecting alternatives.
Talk with an estate planning attorney to see what fits your situation best.
Reference: CNBC (Dec. 7, 2021) “When it comes to a will or estate plan, don’t just set it and forget it. You need to keep them updated.”