Creating and maintaining your estate plan ensures that your assets and family are protected after you have passed away. Knowing the reasons you might need to consider creating or revising a will can help you and your estate planner guide the process to match your goals. Below are some key reasons to consider making or amending your will.
1. Birth of a Child
Having a child is a major turning point in the life of your assets in the sense that your estate now has an identifiable heir. While intestacy (the process by which state law governs estate distribution) does protect children to an extent, allowing passage of assets to them before all others, having a will provides added defense and flexibility. A child’s life is the most important legacy your estate can hope to preserve and providing for that child in a will can help make that life easier after you have passed.
2. Birth of Additional Children
While a well-written will provides for children born after the document is signed, the birth of additional children is a great opportunity to reevaluate asset distribution. A common way for parents to hold assets for their children is a contingent trust. Such a trust is funded and created at the death of the last parent and can be structured so that children get equal or differing shares of the trust’s assets. A contingent trust can also be structured in a way that asset distribution occurs at age-gated intervals (“at age 25, child has access to up to 25% of the trust principal”).
With the birth of an additional child, the previous distribution of the contingent trust may need to be revised. Perhaps it is apparent that Child 1 may need to wait a bit longer to have access to the trust, whereas Child 2 has yet to prove themselves needing more restrictions and can be given more lenient age-gating or other requirements. Additionally, you may want to reconsider the percentage distribution of assets to different children after accounting for need.
3. Newly Married
Choosing someone to legally bind yourself to is a weighty decision and thus requires some reconsideration or creation of an estate plan. A typical will for a married couple with no children states that upon the death of one spouse, assets go to the other spouse. While intestacy also follows this logic, having a will avoids confusion on the subject and allows for more granular distributions if necessary.
Further, most first marriages occur when people have yet to acquire a large amount of assets, and thus are unlikely to have any estate documents. If a person does have a will prior to getting married, the new marriage does not change anything in the document. Thus, revision is necessary to send assets to the spouse.
Like with a new marriage, the ending of a marriage carries a similar need to revise a will. If you executed a will giving assets to your ex-spouse at death, that document is binding until a new will revokes it. Further, your executors, trustees, and guardians may also include members of your former spouse’s family. Revising a will after divorce can ensure that assets go to the right place and that the people you want fill important roles in the administration of your estate.
5. Buying a House
Whether you are a first-time homebuyer or moving to another city, buying a home can be stressful and the home itself is typically a family’s single biggest asset. With a huge new asset, speaking with an estate planner about how to make sure it is dealt with in the way you want is crucial. On a lesser note, it also helps to keep your documents updated with current addresses!
6. Health Scare
Being confronted with the fragility of your body is frightening and eye-opening. Knowing that life could be snuffed out through random chance or a lingering illness is enough to deal with; having to worry about what will happen to your family is too much. Creating a will either during or after (but preferably before!) a health scare can reduce some stress and allow you to only worry about getting better. Further, having incapacity documents in place alongside your will allows your family to take care of you in the way you would want in the event of incapacity.
If you have experienced one or more of these situations, working with an estate planner can help alleviate stress and secure your assets. Looking for more information? Schedule a consultation or call Zach at 615-852-5679.