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Estate Planning,Financial Planning

When Should I Redo My Will?

I’m going to start this post by assuming that you do, in fact, have a will in place.  If not, stop reading this and get that done ASAP (sadly, nearly 60% of adults fall into this category)!

Okay, for the rest of us, how do we know when it’s time to redo our wills?  When do they become outdated, irrelevant, or possibly harmful?  Thankfully, estate law has become a bit simpler over the past few years, but there are a few key mistakes to avoid that could leave your loved ones with a mess on their hands if something were to happen to you.

Mistake #1: Over-complicating your estate plan

Over the past several years, the amount of assets that someone can leave free of estate tax has ballooned.  In addition, married spouses now have “portability”, essentially meaning that you can focus on one higher estate-tax-free amount rather than two individual ones.  This translates into a tax-free estate of $5.7 million for singles and $11.4 million for married couples.

Unless you plan on having an estate higher than those thresholds, an old will has a decent likelihood of over-complicating your estate.  This can happen by having wills that place assets into marital trusts, credit shelter trusts, and other irrevocable trusts to try to avoid estate taxes.  While these won’t necessarily hurt you, they result in additional entities, tax returns, and headaches that you could be stuck with for a long time.

If you’re planning on having an estate of a few million dollars or less, you’re likely going to be fine with a simple will.  So check your old will to see what happens to your money when you die and make sure it’s still appropriate.

Mistake #2: Naming the Wrong Trustees and Guardians

Relationships are funny things, and even more so when dealing with money and our kids.  When you wrote your last will, you might have had a great relationship with your brother-in-law who now you’re not so certain about or who may not even be your brother-in-law anymore!

Check your will to make sure that the people who will take care of your children (guardians) and money (trustees) are still the folks you would most trust with that task.  If not, it’s definitely time to redo your will.

Mistake #3: Leaving the wrong amount of money to your heirs or at the wrong time

If you made your will when your kids were young, you had no clue how they would be able to handle an inheritance.  When they’re older, you have a better sense of their ability to steward wealth and whether it would be a blessing or a curse to them.

It may be that you would be leaving them too much money for their own good (this is way more common than leaving them too little in my opinion), or giving it to them too early (you can stagger distributions if need be) or late (at an age beyond when it would be most useful).  So check your will to see who your beneficiaries are and when they would be entitled to receive how much money.

Mistake #4: Naming the wrong (or no) charitable beneficiaries

Giving money to your favorite church or charities is easy to do through your will (or IRA beneficiary designations), and you don’t have to worry about whether it will cause you to run out of money before you die!  So I always encourage folks to consider making a charitable bequest through their will as it could be the largest gift they ever get to make.

Too often I’ve seen money left to a church that someone attended 20 years earlier, or to an organization that doesn’t even exist anymore.  This should either be updated to current desires (can be done through a simple amendment, aka “codicil”, to your will) or left to a donor advised fund such at a public foundation such as the National Christian Foundation.

If you set up a giving fund at NCF, you can leave a certain dollar amount or percent of your estate to your fund, and then direct where you want the money to go through your giving fund.  This prevents you from needing to update your will in the future if your desires were to change again.  Instead, you just need to update your giving fund which can be easily done anytime.  You can also leave your heirs as successor advisors to the fund and let them decide where some or all of the gifts should go.  This is a great way to allow them be a part of the stewardship process.

Overwhelmed by all of this?  Don’t be.  We’re glad to review your will with you, help you understand where your money is going and who’s in charge of what, and make sure you’re avoiding these mistakes and others like them.  Contact us today and set up an appointment and we’ll help you get peace of mind over your estate plan!