Your estate and the assets within it represent only part of your legacy. But these are legacies you want to preserve for your heirs and beneficiaries.
And with a will in place, you need to be aware, alert and understand the importance of updating this critical legal document. You want to protect your assets, but you also want your wishes and decisions to be followed. Several factors play into why you should update your will and the reasons for doing so.
Life changes require changes to your will
Financial experts typically recommend that a person review his or her will every three to five years. Because during that time, certain life changes may surface, leading you to determine that certain parts of your will are obsolete.
Here are some of the times that should lead you to update your will:
- When you become a parent: Whether your spouse gives birth or you adopt, it is essential to update your will. You want to provide for your children if something happens to you. And naming a legal guardian for your minor children cannot be stressed enough.
- When your marital status changes: A marriage, divorce and death of a spouse bring to light the need to update your will. These, too, are the moments when you should update your durable and medical powers of attorney – the people who will respectively make financial and health care decisions for you if you are unable to do so.
- The receiving of a financial windfall: A significant inheritance or lottery win may lead to a higher tax bracket as a result, so there are tax considerations to ponder. Updating your beneficiaries list may include additional people as well as charitable organizations.
- A financial setback: The loss of money in investments may lead you to change your beneficiaries along with the amount of the assets bequeathed to them.
- When you become a grandparent: Each time a grandchild is born should steer you in the direction of updating your will. You want to provide for them.
- A move to a different state: Different states have different laws pertaining to wills. A valid will in one state may not be recognized in other states.
- When you change your decisions about certain beneficiaries: Perhaps a beneficiary is no longer facing financial challenges, or maybe you had a falling out with a beneficiary.
You also need to make sure to update beneficiaries for assets that fall outside the realm of a will. These include 401(k)s, retirement accounts and insurance policies. What if you still had your ex-spouse listed as a beneficiary on such an account? This may lead to a court fight as your family seeks to get back those assets.
In nurturing your will, peace of mind arrives
Your will needs attention, too, like many things in your life. Creating a will is not a “one-and-done” matter. This legal document needs nurturing. The care you provide for it also will provide for your family, who will gain significant peace of mind.