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When Should You Change Your Last Will and Testament?

Just over 2.5 million Americans died in 2010 according to the Centers for Disease Control and Prevention with the average life expectancy being 78.7 years.  It is with great sadness that I inform you that your death will occur with or without your consent.  As a result, it is imperative that you create an estate plan given the certainty of your death.

Of those considered Baby Boomers, 41% did not have so much as a Last Will and Testament.  Unfortunately, those intestate parties failed to protect their assets and significantly provide for their loved ones.  On the other hand, if you are among those who took the reasonable steps to create an estate plan, let us look at how often should you change its terms.

In my opinion, your estate plan should be reviewed at least every five (5) years; more often if any of the following events were to occur:

Laws change.  Under our current laws, you may transfer slightly more than $5 million tax-free during life or at death.  Those same laws are subject to change given political majorities at the time.  It is well known that the estate tax exemption is under annual scrutiny so even the most well intended estate plans could require revision if the laws change.  For the vast majority of Americans, a $5 million estate is not reality, but events such as inheritances of farms, businesses or significant estates can cause the threat to arise when you least expect it.

Financial issues.  Like most other factors in our lives, our financial stability could change in an instant.  The loss of employment or health affects many with estate plans and requires an immediate adjustment to distributions.  Wars, recessions, technological advances, and bad press can all quickly change the value of our investment portfolios and the effectiveness of any estate plan created under the assumption its funding is concrete.  Strategies such as revocable trusts, special needs trusts, and installment sales to family members or to trusts create an income stream for the person making the transfer, but even with such measures in place, any change in income or financial wealth could require a change in how these strategic estate-planning documents carry out your intentions.

Relationships.  If you marry, divorce, separate, or annul, you should immediately revise your estate plan so that only those you want to receive your assets will in fact do so.  Why allow your documents to remain unchanged when by doing so you may be leaving the remaining assets from a divorce to the nasty rascal who made you divide it in the first place?  When revising your documents as a result of a relationship change, make certain to address not only your estate planning documents but also your non-probate transfers such as beneficiary designations on retirement assets, life insurance, savings bonds, as well as bank accounts, brokerage accounts and real estate.

Having children or adopting.  For many parents, this event triggers their desire to begin an estate plan in the first place.  If you fail or refuse to create an estate plan, the state’s intestacy laws will direct and control your assets rather than pursuant to your actual wishes.  When possible, suggest a guardian for your children in your estate plan.  It does not guarantee that the court will adhere to your wishes when determining the best interests of your children, but the chances a court will recognize your wishes certainly improve.

Death of a loved one or a beneficiary. This one is simple.  Most clients include their loved ones such as a spouse and children as beneficiaries in an estate plan.  It makes sense that their death would require a significant change to any estate-planning package.

Grandchildren born or adopted. If you want to make certain that your grandchildren receive some of your estate, you should specifically list them in your documents as the intestacy laws may allow for their exclusion altogether.  Perhaps more importantly is that your estate plan addresses this new family member if his or her parents die before you.

Good fortune. Perhaps your personally owned business just landed a big, new account or you are expecting a huge financial success such as a sale or initial public offering of that business.  If so, you should think about ensuring your loved ones receive the benefit of that upside potential.  What if you hit the lottery and your take exceeds $5 million…any estate plan in place should receive your immediate attention.

Poor health. The diagnosis of a chronic or terminal illness will affect your family and your estate plan.  If your health allows, I encourage you to address your affairs, including but not limited to, your estate plan.  This is an obvious time to have your lawyer review any documents and bring them up to date.

Todd Miller is the Senior Partner of the Law Office of Todd Miller, LLC in Jefferson City, Missouri.  He has been recognized as Golf Tax Consultant of the Year by Boardroom Magazine three times and candidate for the “10 Best” attorneys for the State of Missouri by the American Institute of Family Law Attorneys and “10 Best” attorneys for the State of Missouri by the American Institute of Criminal Law Attorneys.  Mr. Miller his juris doctorate degree from the University of Missouri School of Law in 1999.  Each Saturday at noon, he hosts a radio talk show entitled the “Mid-Missouri Legal Advocate” on KRMS News Talk 1150AM and 97.5FM at the Lake of the Ozarks.  You may also find him on Facebook, Google+, LinkedIn, and Twitter.

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