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With a new decade comes a new set of challenges, responsibilities, joys, and struggles. No matter what stage of life you’re entering as you ring in the New Year, it’s essential to know that updating or starting a will is crucial for yourself and your loved ones. If you have one resolution to set for the New Year, make it updating your will. At Heban, Murphree, & Lewandowski, we will take the time to answer your questions and start you on the right path toward protecting your legacy.
Who Needs a Will?
So we’ve established that it’s important to have a will, but who needs one, and why? A last will and testament, better known as a will, is crucial for any adult who has possessions that they want to pass down to spouses, friends, family, or loved ones. This includes estates, finances, heirlooms, and other belongings. If you lack a properly executed will, you risk these worldly possessions falling to the state or another unintended party.
If you have children and don’t have a will, you’re taking a risk. Without your explicit instructions, your children may not go to the intended guardian, or they may not receive the full inheritance that they are due. Life can change in the blink of an eye, and if you aren’t prepared, those you leave behind can suffer the consequences. Also, a lack of a will can lead to stressful court battles, hefty fees, and lost finances.
What Does a Will Accomplish?
In addition to passing down your worldly possessions to your heirs, a will can help you limit distributions made to loved ones, children, or friends. It is possible to limit the percentage of an estate left to each heir and in what fashion those distributions are made. For example, you can limit a child to receiving 15% of your estate when they turn 18, and another 15% conditioned on using those funds to attend and graduate college.
A will can also protect against lawsuit and divorce. As unfortunate as it may be, your children may have difficulties with a relationship or with a business as they progress through life. A beneficiary of your inheritance may be involved in an accident or a business venture that fails. If this happens, your beneficiary may have their estate taken by a judgment creditor.
To protect against the unforeseeable, a testamentary trust can be created. This trust goes into effect and receives your assets upon your death. Because it isn’t directly in the hands of your beneficiaries, it can provide divorce and lawsuit protection and prevent asset mismanagement.
When to Update Your Will
If you don’t have a will yet, it’s imperative that you make one. If you already have one, there are a variety of circumstances that warrant an update. Let’s look at a few.
There’s a New Addition to the Family
If you’ve just had a new child, life becomes a whirlwind for at least the first six months. With all of your new responsibilities, a will update may be at the back of your mind, but it should be at the forefront. If something were to happen to you, you’d want to clarify to what happens to your estate. The same applies to adoption.
You Have Divorced, Remarried, or Become Widowed
Keeping the right individuals in your will ensures that unwanted parties do not control your children’s inheritance. It also helps determine who receives your worldly possessions after you pass.
Your Assets or Finances Change
When your estate’s value increases or decreases significantly, you’ll want to take a look at how property is distributed and determine whether changes should be made. When you sell or purchase what can be considered a significant part of the estate, like a home or business, you should review your will with an experienced probate attorney.
A Change in Trustee is Needed
Your executors and trustees are the most critical players in ensuring that your will is properly carried out. Circumstances may have changed that make your previous appointments no longer the best people for the job. Your estate may have advanced and is no longer within the management capabilities of a former appointment or a previous trustee may have moved or passed away.
You’ve Moved to Another State
Unfortunately, estate law varies from state to state, making it challenging to navigate a move without help. You will need to consider that some states still have an inheritance or estate tax. Other regions have state-specific documents that need to be updated, like power of attorney and living wills, that could be invalid once you move.