When Is It Time To Review Your Will?
March 20, 2001
The legislature has stated what happens to the assets of people who die without having made a Will. In many cases, this will be what the person wanted, but that is often not the case. If you fail to make a Will, you also give up the right to decide who will administer your estate, who will be the guardian of your minor children and what charitable organizations will benefit by your gifts. A Will provides for all of this, and can also provide for distribution of funds to your beneficiaries under certain conditions, instead of by out-right gift.
You should review your Will every three years, or sooner if any of the following occur:
- Change in Your Marital Status. Although a divorce in Washington revokes the Will as to the divorced spouse, a replacement beneficiary can only be designated by you through a new Will. The same would apply in the case of the death of a spouse.
- Death of a Primary Beneficiary. Hopefully your Will provides for this by naming one or more contingent beneficiaries, but the death of (or your intention to change) a significant primary beneficiary should alert you to review your estate plan.
- Birth of a Child. Although children are provided for, at least as contingent beneficiaries, in almost all Wills, you would still want to appoint a guardian for your minor children in case neither parent is left surviving.
- Change in Circumstances of a Major Beneficiary. Does an older child need a trust provision for college or vocational school? Do special provisions need to be made for the medical needs of an older or disabled relative? These are just two of many examples which could be cited.
- Change in Your Estate Value. Hopefully, this refers to an increase, not a decrease. Higher estate valuation introduces a new factor - the need to minimize the federal estate tax. Trusts and other changes to your estate plan can help with this, but even when these are not used, they should at least be considered.
- Changes in Tax Laws. Three of the most important tax laws that come to mind are: (1) the step-up in basis of the assets of a decedent to market value at death (your beneficiaries can sell assets left to them without incurring income tax liability); (2) the current estate and gift tax exemption (above which steeply ascending estate tax rates apply); and (3) the estate and gift tax exemption for transfers between spouses. A change in these or other significant tax laws (i.e., tax rules for charitable gifts) calls for a review of your estate plan.
Finally, a word on legal fees for Wills and estate planning services. Many people may feel that they can simply fill out a form and created a valid Will instead of paying a lawyer to do it. While there are probably a number of sources of forms which can be obtained for little or nothing, I believe this is penny-wise and pound-foolish, since there are many tax and other legal considerations that apply to any estate planning situation, which ought to be considered in drafting a valid and enforceable Will which carries out your wishes after you have selected the best options from those available.
My goal when asked to assist with your estate planning is to work with you to consider your available options in light of your individual situation and current tax and estate laws to arrive at a well thought out plan that meets your needs.
The above is furnished as general information relevant in the State of Washington only and may not be relied on as legal advice, specific to any situation or otherwise, by any person, whether or not a client of the firm.
|