When to Update a Will

Clients often ask, "When should I update my will?" A simple answer is "When something happens that makes you very glad, or very sad." That could be the happy long shot of winning the lottery, or the sadness of having a loved one diagnosed with a debilitating disease.

Since Federal estate tax law in 2010 is in a period of transition, now is a good time to review if Federal or State taxes could be due if you should die. In general, there are no taxes if a spouse inherits from a deceased spouse, but starting in 2011 there will be a Federal tax on assets that exceed one million dollars going to others.

Taxes are not the only reason to review your wills. If years ago you left specific gifts to certain people, and the rest to other heirs equally, this could result in unintended consequences. A real life example is a woman who left her house to a nephew, and various stocks and investments to her nieces. The intent was to be roughly equal. Two decades later the house had appreciated greatly, but many of the stocks had fallen drastically. The beneficiaries were nowhere near equal. While this method was probably not the wisest, since the intent was to treat the nephew and nieces roughly equal, it points up the truth that a careful review can point out the potential differences between intent and results.

A critical time for review is when a loved spouse requires long term care. If there is no will, or if the couple have typical husband and wife wills leaving everything to each other, the result will be that everything will go to the sick spouse if the healthy one dies first. This happens far more often than one might think. One solution is to do wills in keeping with Connecticut law that essentially protect one hundred percent of the principal of the couple's assets if the "healthy" spouse dies first.

This can also happen to an unmarried person without children who has elderly parents. If the younger single person dies before her parents, then all the assets will be going to the parents and if the parents need long term care, the assets will usually have to be depleted before a government program can provide the care.

Another situation is when the simple wills leave everything to children, but one of the children suffers financial or marital difficulties. It may be wise to alter the will and have that child's share put into a trust to protect it, either for the child or the grandchildren.

The message that the above scenarios give is that it is penny wise and pound foolish not to review your estate planning documents, because time and health changes can make an earlier estate plan outdated, and potentially harmful to your desires.