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Top 5 reasons you should review your will

Why reviewing and updating your estate plans should remain a priority for you

August 19, 2015 | by Phillip Buchanan


Top 5 reasons you should review your will

Most Americans create their first will when they have children or after they have accumulated some assets, typically no later than the age of 40.  Sadly, many people forget about it thereafter. Some think that updating estate plans will be too time-consuming or costly.   Others just don’t want to think about death or procrastinate and put off making important decisions.

Back when I was in private law practice, I advised my clients to have their wills reviewed by a trusts and estates attorney every five years or so.  While there may be fees associated with making substantial changes, minor changes are often simple and relatively inexpensive (especially if these changes can provide more tax savings for your loved ones down the road).  Moreover, most people feel a welcomed sense of relief when they feel that their long term plans are in proper order.  There are life several life events that make it essential to review your estate plans.

Here are my top 5 reasons to review your will and other estate planning documents:

1.  Addition of new family members: If you have had new children born or adopted since you created your will you should review your plans to insure that you: (a) name a family member or other trusted person(s) to serve as guardian of your minor children (under 18 years of age), (b) designate a person, bank or trust company as a “trustee” to manage assets inherited by your children until they are old enough to manage their assets, (c) specify the age(s) when your children will receive part or all of the assets you leave to them, and (d) specify who gets cherished personal property that you wish to pass down to the next generation (so your little angels are not litigating over your beloved grandfather clock!).

2.  Tax law changes – federal or state: There continue to be major shifts in federal estate and (non-charitable) gift taxes.  Not so long ago, the federal estate and gift tax exemption sheltered $600,000 of assets from tax.  In 2015, it shelters $5,430,000!  This means that an individual can now transfer up to $5.43 million in assets (in total) during life, or at death, without incurring gift and estate taxes.  Charitable gifts can also be structured to stretch this amount even further while also providing for loved ones.

Changing your state of residence may also interfere with your existing estate plans.  For example, estate and property taxes are treated very differently in North Carolina as compared to California. Some states are “common law” while others are “community property” states and the law in your new state of residence may supersede language in an old will or trust.  It would be wise to consult with an attorney to review any legal information specific to your new state of residence.

3.  Divorce or death: In the event you get divorced, you and your attorney should immediately review your will, trust, retirement accounts, life insurance policy and other estate documents to make sure your former spouse does not receive assets you no longer intend to leave to him or her.  Likewise, if your spouse passes away, you should review your estate plans to make certain you have outlined how you would like your assets distributed upon your death.

4.  Inheritance or unexpected change in assets: If you receive a large sum of money (a settlement, lottery winnings or other windfall) or inherit significant assets (a home, land, trust fund, brokerage account, etc.), you should consult with an attorney about any legal and tax impact of this additional wealth. In these cases, you may be able to avoid a heavy tax burden by being creative with your estate plans. Planned giving offers several ways to reduce taxes and provide for your loved ones while ensuring your wishes are fulfilled.

5.  Charitable goals: If you would like to designate part of your estate to a charity (like Duke!) you may do so by establishing a bequest in your will or living trust, or by designating the charity as a beneficiary of an IRA or other tax-deferred asset.  This is relatively simple to do and allows you to provide future support to a charitable purpose that is meaningful to you.  We offer sample language on our website that you may want to review with your attorney or financial advisor if you want to support Duke.  Please feel free to contact our team if you want to explore gift options that may fit seamlessly into your personal and philanthropic goals.

Here are two articles you may want to review for further information about establishing and updating your will:

Estate Planning: Wills and Trusts – CNN Money

Updating Your Will: A Small Step That Goes a Long Way – Forbes

P.S. Be sure to review our blog post on avoiding common pitfalls when drafting your will.

About the author

phil-buchanan-headshot

Phillip Buchanan Senior Philanthropic Counsel for Duke University

Phil is a 25-year veteran of development and gift planning who considers it a privilege to help good people celebrate the joy of giving. He leads Duke’s Gift Planning office and specializes in financial, legal, accounting, and campaign issues related to charitable giving. He has been featured in publications such as BusinessWeek and Kiplinger’s. When he’s not at work, Phil attempts to solve the mysteries of the universe for his three inquisitive young sons.

Phillip Buchanan can be contacted via email or by phone at (919) 681-0467.

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