When to Update Your Will: Events that Affect Your Estate Plan
Not surprisingly, I think it is a good idea to review and think about your estate plan every few years. Things change, including our views on inheritance and our opinions about what is best for each of our heirs if something were to happen to us. There are some events that almost always require immediate revisions to your estate plan. I covered the issue of relocating to Florida in another blog article, but events such as births, deaths, marriage, divorce, changes in the law, or just having your children or grandchildren grow up, also can affect an estate plan.
This article explores what may happen if you do not revise your existing estate plan after a significant event. Thankfully, it is not all bad. In many cases, the law applies to give the result that many people would want in certain situations. But that is not always the case, so if you want your specific wishes to be carried out, you owe it to yourself to take action when needed.
BIRTH OF A CHILD
If a new child is your first, Florida law provides an inheritance for a minor child regardless if the parents do or do not have prior wills. But it is essential to update your plan upon the birth of a first child in order to name a guardian and trustee, and to set the terms of a trust for that child according to your wishes. Otherwise, if something were to happen to both parents, a probate court action would be necessary to appoint a guardian, which sometimes can lead to differences of opinions and arguments among surviving family members. In addition, if you do not provide a trust for the child if both parents die, the child will receive all of the remaining inheritance at age 18, which is probably not wise in most cases.
Usually, well-written wills and trusts of parents contemplate the possibility of more children in the future. Since most estate plans in first marriages treat all minors equally, the birth of another child under a well-written will simply changes the percentage of the childrens’ equal shares, and an estate plan revision is not urgent. If a will existed before children are born and does not provide for children, then they are called “pretermitted children” under the law. Pretermitted children are entitled to receive what they would receive under the law if there was no will. Although, if a prior will was 1.) made when the decedent had at least one child, 2.) does not provide for later born or adopted children, and 3.) leaves everything to the surviving parent when all children of the surviving parent are also children of the decedent, then that plan will be upheld and the pretermitted child will not receive anything directly. Presumably, the surviving parent in that case will take care of the child, as required by law.
Obviously, blended families usually provide challenges and special consideration, so much so that they are a topic for their own blog article at a later date.
DEATH OF A BENEFICIARY
The important issue in the event of the prior death of a beneficiary under a will is the relationship of the decedent to the beneficiary, and the specific language used in the will. Most states, including Florida, have “antilapse” statutes, which generally provide that devises (gifts) in wills to the decedent’s grandparents, or any decendant of the decedent’s grandparents, will not lapse due to the beneficiary’s prior death, but will pass on to the decendants of that beneficiary. Devises to others will lapse, and will pass to residual (“catch all”) beneficiaries.
In summary, the law establishes a default rule that any devise to a close, blood relative (i.e. grandparent or the decendant of a grandparent) was likely intended to survive the death of the initial beneficiary, and continue on to their surviving family members. Of course, you can change the default application of that rule with specific language in your will or trust. But be careful. In Florida, for example, using the language “if he survives me” is adequate to overcome the antilapse rule, whereas in Michigan, that same language is not enough, and other evidence of the decedent’s intent is needed. Also, the Michigan statute includes step-children, but Florida’s statute does not.
Therefore, when you leave something to someone in your will, you need to decide what you want to happen if the beneficiary predeceases you, and whether or not the antilapse rule will apply. Specific, clear language in your will or trust can remove any uncertainty with this issue.
MARRIAGE
Similar to “pretermitted children”, it is also possible to have a “pretermitted spouse.” In Florida, if you have a will that was executed before you were married, your new spouse is entitled to an intestate share of your estate (i.e. what the law provides when there is no will), which could be the entire estate depending on the situation, unless:
- the new spouse waived the right to an intestate share, or was provided for in a prenuptial or postnuptial agreement;
- the new spouse is provided for in the will (presumably they were dating when the will was executed): or,
- the will shows an intention to omit the spouse.
Importantly, except in the case of a valid prenuptial or postnuptial agreement, a surviving spouse will be able to claim under the “elective share” statute which sets a floor for what a surviving spouse is entitled to receive under the law.
DIVORCE
Both Florida and Michigan law essentially provide that if you have a will and get a divorce, unless your will or divorce judgment provides otherwise, any provisions in your will that affect or benefit your former spouse will be applied as though your former spouse predeceased you. A related statute in Florida nullifies certain beneficiary designations in favor of a former spouse made prior to divorce, including on life insurance policies, retirement accounts, and payable-on-death accounts. But this Florida statute includes several, specific exceptions, so it is a mistake to rely on it without determining whether your specific instrument is covered.
Importantly, it is highly recommended that estate plans be updated after divorce. These statutes are the best example of laws that probably apply the way most people would want when divorced spouses fail to update their estate plans. But relying on them can cause confusion among payors and other involved parties, might encourage litigation, and can create more work for your personal representative if you get divorced and then die with a pre-divorce estate plan still in place.
CHANGES IN THE LAW
Even if your personal and family situation has not changed, laws are often updated and changed in ways that can benefit you and your estate. For example, many states, including Florida, have recently enacted statutes that provide guidance on how to handle digital assets in your estate plans. Changes to federal estate tax laws can create enormous, unintended issues for estate plans that used formulas to avoid taxes by using separate trusts and other techniques that may not work as planned as tax laws change. Statutes relating to durable powers of attorney and advance health care directives are regularly updated to provide clearer, and more robust, guidance for those important documents. It is important to check in on your estate plan every few years to both take advantage of the benefits of new laws, and to avoid being caught off guard by others.
CHILDREN OR GRANDCHILDREN GROWING UP
Finally, it is amazing how time flies and things change. Thoughtful estate plans from just a few years ago can become outdated and maybe even unworkable as beneficiaries grow and change. A good example is after children become adults, and you have a better idea of where they are headed, and what is best for them. Unfortunately, some developments might not be all positive, and plans may need to account for unique personality traits, or maybe even special needs.
In the end, if the goal of your estate plan is to provide a thoughtful, efficient way to pass your wealth along to your family, you owe it to yourself to regularly review your estate plan, especially after significant events in your life.
