Many people think that creating a will is a one-time process. However, there are numerous reasons why you may want to update or even redo your will. Knowing when to revisit this vital estate planning document can protect your cherished assets as well as the interests of your heirs, which is why Forbes recommends updating your will when the following circumstances apply.
A New Marriage (or Divorce)
Most people leave their property and assets to family members (such as spouses and children). If you’ve recently re-married, now is the time to go over your will to make sure it reflects your current relationship. The same can be said of a divorce; failure to change your will could result in your assets being distributed to your ex, or at least result in a contentious court battle. You should also check any beneficiary designations on retirement accounts or life insurance policies to ensure the proceeds are distributed to the right person after you’re gone.
Being diagnosed with a terminal illness is devastating. While you will have more pressing concerns on your mind, you also want to make sure your will is in line with your current wishes. For instance, if your estate is subject to steep taxes you may be able to use the gift exclusion to your advantage (this allows you to provide non-taxable gifts up $13,000 or $26,000 if married). You can do so on a yearly basis, which enables heirs to make the most out of your assets without the added worry about tax issues.
A Change in Your Finances
You can reduce the impact of taxes when in receipt of a large sum of money by distributing assets to your family before the transaction actually occurs. Once you receive the money taxes will be applied, which is why it makes sense to be proactive in your estate planning. You also want to consider changing your will if you’ve recently lost a great deal of money, as the document may no longer reflect your current financial outlook.