Good Reasons to Update or make a New Last Will and Testament

Our lives continually change over time and so do your estate-planning needs.
Update your Last Will and Testament to reflect family births, deaths, separations, or divorces. Review guardian, trustee, and personal-representative designations. Examine the types of specific gifts to people or groups you have made or wish to make; and recalculate how much life insurance you need, if any.

Even if you have created your Will and an estate plan, it is always a good idea to revisit them as your life circumstances change. Some momentous events in your life will require revisions to these documents and plans such as when:

You Get Married
Your new spouse does not always become your primary heir automatically. For instance, if you don't have children, your parents or siblings would inherit your estate. If you wish to leave all your property to your spouse, a new Will is required. Keep in mind that you cannot disinherit a spouse without his or her consent.

Additionally, if you are living with someone but are not married and you want your significant other to inherit any of your property, you need a Will.

You Become a Parent
How will your children be cared for both financially and physically if both you and your spouse pass away. A Will is required to name a guardian for your children at your death.

You could also consider using testamentary trusts, a trust in your Will, to handle assets that would go to your children.

The execution of a durable power of attorney naming your spouse, or someone else to act for you in financial matters when you cannot, serves to operate during your lifetime but ceases to be useful at your death.

You Approach Middle Age
As you Age, your assets are growing, therefore some tax planning is an excellent way to save your heirs thousands in federal estate taxes. The time to make these tax plans is when you and your spouse have a combined net worth, including house, retirement plans, and insurance proceeds, that comes close to the amount subject to the federal estate tax. You can give an unlimited amount to your spouse tax-free, by designating it in your Will, or by owning all assets jointly, but with a little more planning, a married couple can leave twice the amount of the estate-tax exemption--up to $7 million after the second spouse dies, assuming that Congress reinstates the estate tax that lapsed at the end of 2009 and continues the $3.5 million exemption in effect at that time.

You Get Divorced
Once you are divorced you should review absolutely everything in your estate plan. The people in your life will change and that is why you must change your estate plan. You need a new Will altogether because in most states a divorce automatically revokes the provisions of a Will that apply to a former spouse. In some states a divorce may revoke the entire Will.

You may want to set up trusts to control the assets you plan to leave your children without your former spouse’s involvement and access and you will want to revise any existing Trusts created prior to the divorce, to remove your former spouse as a beneficiary or trustee.

Additionally you should change your durable power of attorney or a Living Will and, unless restricted by a divorce decree, make sure you change the beneficiaries on your life insurance, pensions, and IRA.

You Remarry
You and your new spouse may need to plan for your blended families from prior marriages and you may need a plan for additional children you have together. A prenuptial agreement may be an excellent part of your estate plan, should you want to keep assets separate and nullify your inheritance rights to each other's estates or you may want to provide for your new spouse yet still be certain your children are taken care of adequately.

You Retire or Move to Another State
If you retire and/or move to another state, you should always have your estate-planning documents reviewed taking into account that new state's laws and your current financial and medical needs.

Durable powers of attorney become even more important during your retirement years. For example, if you are stricken with a stroke or Alzheimer's disease, you may become unable to give the required consent for financial transactions, so you want to be sure that you designate an agent to make these important transactions for you if you cannot do it yourself.

Life insurance coverage may not be needed anymore. But if your estate faces an estate-tax liability or if your spouse is dependent on retirement income that will end with your death, consider keeping some coverage. Also, consider taking out a long-term-care insurance policy to help with medical costs.

Your Spouse Dies
This loss can leave you emotionally vulnerable to financial mistakes. Take your time in making any changes. For at least six months, avoid selling your house or making other drastic changes to your lifestyle.

If your spouse's estate is subject to the federal estate tax seek expert tax advice; there may be tax benefits to disclaiming some of your inheritance in favor of alternate beneficiaries, such as your children. You'll need to make a new Will and possibly a Trust.

It is a good idea to review and execute a new durable power of attorney and a Living Will (which expresses your wishes in case of an illness that leaves you permanently incapacitated) every five years so the date of signing is not stale and they continually reflect your current wishes and life’s circumstances.

Put all of your estate planning documents in a safe place, and tell people who need to know where they can be found when needed

REASONS TO UPDATE YOUR ESTATE PLAN

Many people think that once they have put together their legal documents these documents will protect them forever. That may not be the case. Estate planning is an ongoing process. You must not only develop and implement a plan that reflects your current financial and family situation; you must also constantly review your current plan to ensure it fits in with any changes in your life and circumstances.

With the extensive changes under the 2001 tax act and the Deficit Reduction Act of 2005, and the probability that more changes will occur in this decade, reviewing your estate plan regularly is now more critical than ever.

Family changes. Marriages, divorces, births, adoptions, and deaths can all lead to the need for estate plan modifications.

Increases or Decreases in your income or net worth. What may have been an appropriate estate plan when your income and net worth were much higher or lower may no longer be effective today.

Geographic moves. Different states have different estate planning regulations. Any time you move from one state to another, you should review your estate plan.

New health-related conditions. A child may develop special needs due to physical or mental limitations, or a surviving spouse's ability to earn a living may change because of a disability.

Your present Estate Plan was implemented more than three years ago. Many financial institutions will not honor your Power of Attorney documents if they were signed a long time ago. They may consider them to be “stale.”

Laws change. The current validity of your documents may have been affected by recent changes in the law; make sure your Estate Plan still complies with the laws of today.

Such circumstances often require an estate plan update.

WOMEN AND RETIREMENT

There are significant gender differences when it comes to retirement. For many women, retirement or the prospect of retirement may not be the relaxing retreat it is reputed to be. In general, women earned less over their lifetimes than men and live longer in retirement, and they tend to have less money saved when they reach retirement. According to the Government Accountability Office, 12 percent of women over age 65 live in poverty, compared to only 7 percent of men. Women frequently don’t have continuous full-time employment because they are more likely to take time out of the paid workforce, reduce their hours, or become self-employed. They do this in order to raise children and, in later years, many make similar choices to care for elderly relatives. Marriage and relationship breakdown often has a greater financial impact on women, including on their retirement income; and the fact that women’s lower retirement savings have to be spread over a longer period than men’s retirement savings because they live longer. A woman who is 65 years old today can expect to live to age 85, while a 65 year old many can expect to live only to age 81. Women have lower lifetime earnings, because of this women reach retirement with smaller pensions and other assets than men do. Elderly, unmarried women, including widows, get 51 percent of their total income from social security. Unmarried elderly men get 39 percent; elderly married couples get 36 percent. For 25 percent of unmarried women Social Security is their only source of income, compared to 9 percent of married couples, and 20 percent of unmarried men.

Social Security. Social Security has an inflation protected benefit that will last as long as you live, it is impossible to outlive one’s social security benefit. The social security spousal benefit helps many women, even if they did not work at all outside the home. 74 percent of elder widows receive benefits based on earnings of their deceased spouse. Social Security provides benefits to spouses of any age who care for children under age 16 if the worker (other spouse) is retired, becomes disabled, or dies.

Inheritance. News reports speculate that the possibility of inheriting some money at one time or another will be a huge transfer of wealth to the baby boom generation, but the inheritance picture may not be so promising. As women think about retirement planning, it may be useful to factor in any inheritance receive from parents. Knowing how much to expect requires a broad discussion with parents about estate planning, a difficult topic to raise because it involves discussions about money and death, two subjects that are very personal and uncomfortable for most people.

Women should make the most of any inheritance they receive. The median value of what boomer families received from an inheritance was about $64,000.00. While this seems like a lot of money, it is not going to provide for all of one’s financial and retirement needs. If you do receive an inheritance, make the most of it.

Here are some suggestions:

Don’t Do Anything - Losing a family member is difficult; take time to grieve. While doing so, deposit the money in a stable, liquid account such as a money market account. You can afford to take a couple of months to deal with your emotional needs rather than rushing into investments that you may regret later.

Don’t Blow It – When you receive an inheritance, you may feel rich. It’s alright to spend a small amount of it on yourself, but do not blow it all on a boat, or a trip that you really cannot afford.
Make a Plan – Decide what you are going to do with the money before spending any of it. Make a plan; it forces you to really think about what you want to do.

Pay off Debt – Consider paying off high-interest consumer or credit card debt.

Invest for the Future – Think about using the money to build a secure future. Figure out how much you need to save for retirement and invest wisely in financial products that guarantee no loss of principal. These types of safe financial products provide a slower interest growth, but with the current volatile economy, you want to make sure you do not lose what money you started with in the first place.Inheriting IRAs – If you inherit an IRA, you can continue to take advantage of tax-deferred savings as a beneficiary. The rules are different for spouses and non-spouses, and traditional and Roth IRAs. Check with an estate planning attorney.