Preparing a will is the best way to be certain your property is distributed according to your wishes. What many people don't realize is that keeping your will up-to-date is as important as having a will. That is why the California Society of CPAs (www.calcpa.org) recommends that you review your will periodically, especially when changes to personal circumstances, your financial situation or to the tax laws occur. Here are some situations that should trigger an immediate will review:
Marriage, Divorce, and Remarriage -- These life events can have a major impact on financial planning documents. For example, if a widow or widower remarries, it is important that the will is updated to show how the children from the previous marriage and the new spouse should be provided for in the will.
A New Heir -- Updating a will is especially important when you have a child, because your will allows you to name a guardian to care for your child in the event that something happens to both you and your spouse. If you don't name a guardian for your child, the courts will appoint one and it may not be whom you would have selected.
Death of Someone Named in the Will -- The death of a named executor, guardian, beneficiary or trustee signals a need to make changes to those provisions in your will.
Substantial Increase/Decrease of Net Worth -- If you win the lottery, get a large personal injury settlement or receive a large inheritance, additional tax planning might be necessary to minimize the tax bill on your estate. On the other hand, a significant decline in your financial assets might dictate altering your specific bequests or making other modifications.
Relocation to Another State -- If you relocate, you should have an attorney in the state of your new residence review your will. This is especially important if you move to or from a community property state. Although all states recognize a will that was properly created in another state, there may be some nuances that need to be addressed.
Tax Law Changes -- Updating your will allows you to take advantage of recent developments and new techniques in estate planning. With the estate tax exemption scheduled to change a number of times between now and 2011, and the prospect of future changes, it's more important than ever to review your will on a regular basis.
Changes to Your Intentions -- Changing your mind about something in your will should be handled as soon as you've decided. From adding a new beneficiary or charitable donation to second thoughts about your executor or the guardian of your children, be sure to make these changes on a timely basis. If your revised intentions do not make it into print, they will have no legal effect.
