Estate Planning: Six Reasons Why an Update May be in Order

Many people don’t start thinking about their estate plan until they are thinking of retirement, or see will writing as a ‘set and forget it’ exercise. Will writing can be a long, tiring and emotionally stressful process and as a result most will-writers prefer not to think about the document once it’s been done. Unfortunately, lack of timely updates can create discrepancies between the terms of one’s will and their true intentions at the time of their death.

Everyone’s life changes over time, often unexpectedly, and it’s normal to forget to reflect these changes in estate plans and make updates accordingly. It is good practice to review a will and estate plan annually to ensure that everything is up-to-date and accurately reflects how the will writer intends to distribute their estate. If you’ve had a major change or addition to your life and family, it may be time to update your will. For more on this, read our blog on what to do after a will is written. If you haven’t written a will yet, read our blog post on why you should have a will and the benefits of having one.

How You Can Update Your Will

If, as a result of your review, changes to your estate plan are needed, there are two main ways of making modifications: writing a codicil and writing a new will. Each option has different benefits depending on your individual circumstances. While it might sound burdensome to re-write a will or draft a codicil, it’s often much easier than it sounds. Usually, the new will is very similar to the original and simply incorporates the few changes that the writer wishes to make. For more information, read our blog on how to make a revision to your will.

In addition to a will, there are other components to a well thought out estate plan that you can consider, including:

• A power of attorney – appointing an individual with the legal right to manage your legal or financial affairs in case you are unable to;
• A healthcare proxy or representation agreement – this enables someone to make healthcare decisions on behalf of someone else if they’re incapable; and,
• An insurance coverage review – terms of a will do not automatically apply to property such as life insurance, RRSPs, RRIFs and TFSAs (if the accounts have named beneficiaries).

Some of the most common life events that require a will to be modified are as follows:

1. Birth of a Child

Arguably the most significant life-altering event in someone’s life is the birth of a child. Parents can become busy with their newborns and forget to update their will to reflect this important change. This can be true in the case of grandchildren being born as well. While succession plans may seem obvious, you should clearly express your intentions in a will. This is particularly important if you have multiple children who you’d like to inherit different assets. Parents or guardians of minors should appoint a guardian to care for them in the event of their parents’ death. A guardian is someone who would be the legal caretaker for the children until they reach the age of majority, and you should update to your will to include information for your child’s potential guardian.

2. Marriage and Divorce

Spouses are typically the most prominent beneficiary in their partner’s will. Following a marriage, separation or divorce, people should clearly reflect their change of marital status in their will. Many spouses choose to form a joint or mutual will which means that the first person to die will have their entire estate transferred to their spouse. If the other spouse dies, then the estate is distributed according to their will. Remember that someone who has lived in a “marriage-like” relationship with someone for two or more years may have rights for spousal support as if the couple were legally married. For more information, read our blog on spouses.

3. Receipt of an Inheritance

If a person inherits an estate asset, they should update their will. This is crucial, especially for high-value assets. Excluding a large asset from the will may result in intestate distribution of the asset. Intestacy laws could divide your estate contrary to your wishes. Always remember your will to reflect new inherited assets as soon as possible.

4. Business Creation and Sale

Business owners must revise their wills to include their company shares and their interests in the company. Keep the document up to date if the company relationship or structure changes. Sometimes, parents want one child to control the business. The other children may pursue different careers. One child may buy siblings’ shares to ensure a fair transaction.

5. Tax Legislation Changes

Tax laws change frequently. People may not know about available tax advantages when distributing an estate. Consult estate planning professionals to keep your will current and ensure efficiency for your financial planning. Maximize your estate’s potential value under the latest tax laws by keeping your will updated.

6. Death of Named Beneficiaries

Named beneficiaries might die before the will writer. In such cases, redistribute the estate to other family or friends. Otherwise, intestacy rules may apply. Update your will to distribute assets as desired. For more on the rules of intestacy in British Columbia, see Part 3 of the BC Wills, Estates and Succession Act.

Update Your Will- Next Steps

Updating your will after a life-altering event isn’t difficult. However, excitement or despair may make you forget estate plan consequences. Regularly review your estate plan with an experienced lawyer for effective planning for the future. Ensure your will and related documents reflect your intentions at the time of your death.

Looking for more information? Read our page on the basics of estate planning.

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.