- Whether you have only a will or a more robust estate plan, a review should be done every few years at least, although there are a variety of reasons to do so more frequently.
Experts recommend revisiting your will and other estate-planning documents at least every few years unless there are reasons to do it more frequently — which is common. That could include things like marriage, divorce, birth or adoption of a child, coming into a lot of money (i.e., inheritance, lottery win, etc.) or even moving to another state where estate laws differ from the one where your will was drawn up.
The pandemic has spurred an interest in estate planning, which includes a will and other legal documents that address end-of-life considerations. For instance, 18- to 34-year-olds are now more likely (by 16%) to have a will than those who are in the 35-to-54 age group, according to Caring.com research. In the 25-to-40 age group, just 32% do, according to a survey from TrustandWill.com and 1Password.com.
Nevertheless, fewer than 46% of U.S. adults have a will, according to a Gallup poll in June.
If you’re among those who have a will or full-blown estate plan, here are some things to review and why.
It’s not you, it’s them
Aside from reviewing your will in terms of who gets what, it’s also worth checking whether the person you named as executor is still a suitable choice. This is the person who is charged with carrying out your wishes. It’s typically a big job. Things such as liquidating accounts, ensuring your assets go to the proper beneficiaries, paying any debts not discharged (i.e., taxes owed), and even selling your home could be among the duties undertaken by the executor. Also be sure the guardian you’ve named to care for your children is still the person you’d want in that position. Additionally, take a look at the people you assigned powers of attorney to. If you become incapacitated at some point, the people with that authority will handle your medical and financial affairs if you cannot. Often, the person who is given this responsibility for decisions related to your health care is different from whom you would name to handle your financial affairs. As with choosing an executor, make sure whoever would hold the financial reins is trustworthy, experts say. In other words, even if you’ve had no major life event, individuals you previously chose to handle certain duties may no longer be in a position to do so.
Some assets pass outside of the will, including retirement accounts such as 401(k) plans and individual retirement accounts, as well as life insurance policies. This means the person named as a beneficiary on those accounts will generally receive the money no matter what your will says. “You definitely see that happen,” Foulks said. “We’ve seen accounts left to an ex-spouse and then the family has to go through a court process to try getting it back.”
It may be time for a trust
If you want your kids to receive money but don’t want to give a young adult — or one prone to poor money management or other concerning behaviors — unfettered access to a sudden windfall, you can consider creating a trust to be the beneficiary of a particular asset.
A trust holds assets on behalf of your beneficiary or beneficiaries, and is a legal entity dictated by the documents creating it. If you go that route, the assets go into the trust instead of directly to your heirs. They can only receive money according to how (or when) you’ve stipulated in the trust documents.
The average cost to set up a trust using an attorney ranges from $1,000 to $1,500 for an individual and $1,200 to $1,500 for a couple, according to LegalZoom.com. Doing it yourself with online software could run at least several hundreds of dollars.
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