When Do I Need to Change My Will?
Experience teaches us that the only constant in life is change. But we don't always keep up with the important tasks such as updating wills and other important legal documents that should accompany big changes in our lives. Your will should always be tailored to your current family and financial situation, not the one you faced five years ago or maybe even just last year.
Here are some events that should nudge you toward making a new will and reviewing beneficiary designations you've made for insurance policies, bank accounts, and retirement accounts.
• You get married
• You are unmarried, but have a new partner.
• You get divorced.
• You have a new baby.
• You have new stepchildren.
• You acquire or dispose of substantial assets, such as a home.
• You're married and move from a community property state to a common law property state, or vice versa
Community Property States |
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*Couples in Alaska can make written community property agreements |
You change your mind about who you want to inherit a significant portion of your property.
Trusts:
Trusts can be categorized in a number of ways. A trust may be revocable or irrevocable, living or testamentary, grantor or nongrantor, funded or unfunded.
Revocable Living Trust:
A revocable trust is a trust that can be altered, amended or revoked by the grantor (creator) of the trust. While an irrevocable trust cannot be revoked by the grantor, the grantor may retain the power to make investment decisions and to control the distribution of income and principal to the beneficiaries. Nevertheless, in most cases, the term “irrevocable trust” refers to a trust in which the grantor has relinquished not only the right to revoke, amend or modify the trust, but also the right to exercise other powers.
A trust that is created during the grantor’s lifetime is referred to as a living or inter vivos trust, while a trust that is established under a testator’s will is referred to as a testamentary trust. In most cases it will not make any difference whether the trust is a living trust or a testamentary trust if the primary purpose of the trust is to provide for the administration of all or a portion of the decedent’s assets for a period of time after the decedent dies.
WHY USE A TRUST?
• Avoid Probate
• Manage Assets
• Tax Savings
• Provide for Minors and Other Persons Under a Disability
• Provide for Spendthrifts
Irrevocable Special Needs Trusts:
A Special Needs Trust (“SNT”) refers to a trust set up for a disabled beneficiary which will avoid a period of ineligibility for certain government benefits such as SSI and Medicaid and will also avoid the treatment of the trust as a resource for SSI or Medicaid eligibility purposes. There are two types of SNTs: the Third-Party SNT and the Self-Settled SNT.
Third Party SNT
A Third Party SNT is a trust set up and funded by someone other than the disabled beneficiary. In most cases, a parent or relative will set up a third party SNT as part of their estate plan. This third party SNT allows parents and grandparents to bequeath part or all of their estate to the disabled beneficiary while preserving the beneficiary’s public benefits. This third party SNT can be included as part of a will or a trust agreement. At the beneficiary’s death, the property bequeathed can pass as designated in the will or trust agreement. A word of caution; however: the trust must be written to clearly state the grantor’s intent that distributions are to be made solely in the discretion of the trustee and that the trustee is under no obligation to provide for the beneficiary’s support or distribute funds directly to the beneficiary.