Updating a Will: A Comprehensive Guide to Changing Your Will
A will is one of the most useful tools you can use when planning for your estate. Upon your passing, this simple document is your loved ones’ guide for distributing your assets to your beneficiaries. Simply creating a will, however, is not enough. Having a will is as important as keeping it updated. A will is the most effective when it correctly reflects the changes in your life circumstances, financial status, and family dynamics. This post will guide you on why and how you should update your will regularly.
Why Update Your Will
Updating your will is a must when you encounter or undergo the following:
Major Life Events
There are events in your life that can alter your wishes and, hence, how you want your assets to be distributed. Update your will to deal with the changes caused by significant life events such as:
Marriage - updating your will gives you better control of the distribution of your and your new spouse’s assets than current marriage laws.
New partner - you can update your will to name your new partner as the beneficiary of the estate even without marriage.
Divorce - updating your will after a divorce lets you revoke or revise any beneficiary rights of your ex-spouse.
New family members - updating your will enables you to include newly born or adopted children and stepchildren as your beneficiaries.
Death of beneficiaries - revising your will allows you to remove dead beneficiaries and redistribute your assets among those who remain or name new beneficiaries in their place.
Changes in Assets
Just like your life circumstances, your assets do not remain the same over time. You must update your will to reflect any changes in your assets, which include:
Acquiring new assets - when you acquire new properties, valuable objects, and other assets, updating your will lets you specify who will inherit these assets and under what conditions.
Selling assets - updating your will allows you to remove any sold property or asset from your will to avoid confusion and update the distribution of the proceeds if necessary.
Significant increase in wealth - when you increase your wealth through investments, inheritance, rewards, winnings, etc., changing your will helps you update the increase in the value of your estate, ensuring the distribution aligns with your wishes and considers any potential tax implications.
Business ownership - when you start a new business or acquire additional shares in an existing company, you must update your will so you can include instructions for the succession of your current business interests.
Gift and donations - changing your will lets you include specific provisions for a gift or donation, detailing the amount or percentage of your estate that should go to the charity and any conditions attached to the gift.
Debt changes - when you incur new debts or pay off debts, updating your will allows you to modify any specific instructions for paying off remaining debts from your estate.
Insurance and retirement changes - when you make changes to your life insurance policy, take out a new one, or update your retirement account beneficiaries, it’s necessary to update your will to coordinate the beneficiary designations on these accounts to avoid conflicts.
Divestment or dissolution of assets - when you dissolve a partnership or liquidate a significant portion of your assets, you must update your will to remove these assets and reallocate the intended inheritance to other beneficiaries or assets.
Changes in Relationships
Relationships also evolve and change according to different circumstances. You must update your will to reflect your changed wishes because of the following:
Estrangement or reconciliation - when you become estranged from or reconcile with a family member, update your will to reflect the current nature of your relationship, either by removing or adding them back into your will.
Beneficiary circumstance changes - when your beneficiary gets married, gives birth, wins the lottery, etc., you can change your will to protect your beneficiary’s inheritance from a potential future divorce, provide for potential grandchildren, or transfer their inheritance to others more in need of it.
Changing your executor, trustee, or guardian - when the individuals are no longer suitable due to changes in their life or your relationship with them, updating your will lets you appoint a new, more suitable individual to these important roles.
New friends or partnerships - when you form a close bond with a new friend or business partner, update your will if you decide to leave them a specific asset or a portion of your estate.
Changes in caregiving needs - when you become responsible for the care of a relative or friend, you can update your will to provide for the caregiving needs of this person, ensuring they are taken care of financially after your passing.
Changes in family dynamics - when your family dynamics shift, such as a child becoming financially independent or dependent, adjust your will to reflect these changes, perhaps altering the amount or type of inheritance provided to better suit the current situation.
Changes in Tax Laws and Regulations
Tax and estate planning laws can change. You must stay informed about these changes and update your will accordingly. This way, you can minimize tax liabilities and ensure compliance with current laws. Although it is not common for laws to change per se, some circumstances may cause you to update your will. These circumstances include:
Moving to a different state - when the estate laws and regulations of your previous state are different from your new location, update your will to make sure the terms and provisions coincide with the laws and regulations that apply to your new state.
Changes in estate tax thresholds - when the tax threshold is increased or lowered, update your will to include strategies and arrangements that can minimize your estate taxes.
Changes in international laws - when you own properties in other countries and the laws of inheritance for non-residents in those countries change, update your will to ensure that your foreign property is transferred according to your wishes and in compliance with the new laws of the country where the property is located.
Ways to Update Your Will
If you experience any of the above changes, you can update your will through:
Creating a Codicil
A codicil is a legal document that amends an existing will and is used for minor changes or additions. Create a codicil following these steps:
Draft a clear statement of the changes or additions you wish to make.
Reference the old will by specifying the exact part you wish to change.
Sign and witness the codicil following your current state’s legal requirements.
Attach the codicil to the original will to ensure that both documents are found together and read as one.
Writing a New Will
Often, writing a new will is a better option than using a codicil. This allows for major changes to be clearly stated in one statement and the revocation of the old will, eliminating potential confusion or contention by concerned parties. Writing a new will is easy. You can use our free template here and follow these steps:
Draft a new will and include all your current wishes and provisions.
Revoke the old will by clearly stating on your new will that all previous wills and codicils are revoked.
Sign and witness following your state’s current legal requirements.
Destroy all copies of your old will to avoid confusion.
Other Ways
If your original will has a personal property memorandum (PPM) you can update and manage your list of personal belongings without the formalities required for updating a will. A PPM is a separate document referenced in your will that lists specific items of personal property and the individuals who should receive them. You can easily update your PPM for any changes in properties, instructions, distributions, and other revisions.
Some assets, like life insurance policies and retirement accounts, pass directly to named beneficiaries. If you wish to change your beneficiaries to these assets (for example, your 401(k) beneficiary after a divorce), you can update your beneficiary designations without making any changes in your will. Simply contact the financial institution involved to request and complete the beneficiary designation forms.
Update Your Will Wisely
Updating a will is a crucial aspect of any effective estate plan. Whatever approach you choose to update your will, make sure that you do it regularly and follow approved legal procedures. We recommend always covering your bases by consulting with legal experts for professional advice. Changing your will without a lawyer is possible, but be wise and have your draft checked by a legal expert before you have it signed and witnessed. Consult for free with Rilus Law and update your will wisely today!