Possible Reasons to Change Your Will or Estate Plan
- You Marry or Just Live With Someone
Your new spouse doesn’t automatically become your sole heir. In Kentucky, a spouse is entitled to one-half of your real estate and your other property. If you don’t have any children, your parents or siblings would get the rest of your estate. To leave all your property to your spouse, you need a will. You cannot disinherit your spouse.
If you are living with someone but are not married and you want your significant other to inherit any of your property, you need a will.
- You Become A Parent
An important concern will be how your children will be cared for if both you and your spouse die. Prepare a will and appoint a guardian for your children.
Consider using testamentary trust and appoint a trustee in your will, to handle assets that would go to your minor children. Execute a Durable General Power of Attorney naming your spouse or someone else to act for you in effective event you become disabled or mentally unable to handle your affairs.
- You Approach Middle Age
Assume your assets are growing, so tax planning could save your heirs federal estate taxes. The time to act is when you and your spouse have a combined net worth including house, retirement plans and insurance proceeds, that approaches the amount subject to the federal estate tax. You can give an unlimited amount of your assets to your spouse tax-free since there is an unlimited marital deduction. But with a little more planning, a married couple can leave twice the amount of the estate-tax exemption – up to $10.8 million after the second spouse dies.
Update your will to reflect family births, deaths, separations, or divorces. Review guardian, trustee, executor, power of attorney appointments. Reevaluate the nature and extent of specific gifts to heirs or groups. And recalculate how much life insurance you need.
- You Get Divorced
Once you get married you need an estate plan. You need a new will because in most states a divorce automatically revokes the provisions of a will that apply to a former spouse. In some states a divorce revokes the entire will.
You will want to consider setting up trusts to control the assets you plan to leave your children. You will want to revise any living trusts to remove your former spouse as a beneficiary or trustee. Do this same with a general durable power of attorney or a living will and health care power of attorney. Also, unless restricted by a divorce decree, change the beneficiaries on your life insurance, pensions, and IRA.
- You Remarry
You and your new spouse may have to plan for children of your first marriage and for children you have together. Consider a prenuptial agreement if you desire to keep assets separate and nullify/waive your spousal rights and inheritance rights to each other’s estates.
You’ll want to provide for your new spouse and still be certain your children from your first marriage are taken care of. To do this, talk to an estate-planning lawyer about a qualified terminable interest property trust – QTIP Trust. This type of trust can be set up in a will to give your spouse lifetime income from the trust property and some limited rights to principal and when your spouses dies, the assets go to beneficiaries you have chosen.
- You Retire or Move to Another State
If you retire to another state (or any time you move to a new state, for that matter), have your estate-planning documents reviewed in light of that state’s laws and your current needs.
A general durable powers of attorney become even more important. For example, if you are stricken with alzheimer’s disease, you may become unable to give the required consent for financial transactions. Life insurance coverage may not be needed anymore. But if your estate faces an estate-tax liability or if your spouse is dependent on retirement income that will end with your death, consider keeping the life insurance coverage.
- Your Spouse Dies
A loss of a spouse can leave you vulnerable to financial mistakes. For at least several months, avoid selling your house or making other drastic changes.
Seek legal and personal advice. There may be tax benefits to disclaiming some of your inheritance in favor of alternate beneficiaries, such as your children, if your spouse’s estate is subject to the federal estate tax and you have enough assets of your own, including liquid assets.
You will need to execute a new will and, if needed, a revocable living trust. Execute a new general durable power of attorney, and a living will and health care documents (which expresses your wishes in case of an illness that leaves you permanently incapacitated).