We’re often asked “Do I need a will?” or “How often should I review and update my will?”
As with many questions in the law, the answers to these questions are not the same for everyone. For each person, the answer depends on a cost-benefit analysis. There is a cost, in terms of effort, time and money, to make a will for the first time or to review and update an existing will. The potential benefit is that the new will or updated will would better reflect the client’s wishes and give the client better peace of mind. In this post, we’ll discuss some of the important factors to consider in doing your own cost-benefit analysis.
“Do I Need a Will?”
Every person over age 18 who owns anything could have a will. But in many cases, it might not be worth the investment of time, effort and/or money. In this section, we’ll discuss some of the key decision points for someone considering making a will for the first time.
For this discussion, assume that a will serves two primary purposes. First, a will directs the distribution of a person’s solely-owned property at death. Second, a will allows parents of minor children to designate guardians who will care for their children if both parents pass away before the children are adults. Of course, this is a gross oversimplification and ignores many other good reasons to make a will, including tax planning. But for purposes of this discussion, we will focus only on those two basic purposes: distribution of property at death and appointing guardians of minor children.
To see why a will may be necessary in some cases, we have to understand what would happen if a person didn’t have a will: state laws would determine what would happen to that person’s solely-owned property and how guardians would be appointed for orphaned minor children.
Distribution of property would be determined by the intestacy statute of the state where the person resided at death. It’s important to note here that an intestacy statute would have no control over property that already had a designated beneficiary (such as a joint bank account or real estate held as joint tenants with rights of survivorship). As we explained in The Importance of Estate Planning, some people may be able to do all their estate planning without a will simply by making sure their beneficiary designations are up to date.
Let’s suppose that someone died without a will and he or she owned property that did not have any designated beneficiary. This property, called “probate property,” would be distributed according to the state intestacy statute. These statutes vary considerably from state-to-state. Under current law in Connecticut, for example, if the deceased person had a surviving spouse and surviving children with that spouse, then the spouse would inherit up to the first $100,000 of the net estate plus one-half of the remainder. The children would share equally in the other one-half of the remainder. Or if the deceased person left a surviving spouse and at least one surviving parent, but no surviving children, then the surviving spouse would inherit up to the first $100,000 of the net estate plus three-quarters of the remainder. The deceased person’s parent or parents would inherit the other one-quarter of the remainder. The state intestacy statutes are default rules. If they don’t result in the disposition of property that a person wants, he or she is free to make a different plan using beneficiary designations and a will.
Similarly, if both parents of a minor child died without wills, state law would determine who would care for their child. In Connecticut, a probate court would appoint a guardian for the child. In making its choice of guardian, the court would consider a number of factors, including the best interests of the child, but there would be no guarantee that the court would choose the same person that the parents would have chosen. However, by making a will, a parent can ensure that his or her choice will be appointed as guardian (barring extreme circumstances like misconduct by the potential guardian).
By considering what happens when a person dies without a will, the reasons to have a will are much clearer. A person should have a will if it is necessary to ensure that his or her property passes as desired upon death. In some cases, simple beneficiary designations may be enough to ensure the desired disposition or the state intestacy statute may be adequate, but in other cases there is no substitute for a will.
Second, a person should have a will if he or she would like to appoint a specific person or persons as guardian of his or her minor children, since there is no guarantee that a court would appoint the same person(s) if the decision is left to the court.
For these reasons, it typically makes sense to consider making a first will when any of the following events occur in one’s life: the purchase of a first home, any significant increase in net worth, a marriage or the birth of a child. Each of these events is a good time to ask the question whether you need a will, although in some cases, you might come to the conclusion that you still don’t need a will.
Of course, even if it’s not the right time for you to make a will, it is generally a good idea for everyone over age 18 to have a Durable Power of Attorney and Healthcare Directive.
“How Often Should I Review My Will?”
Anyone who already has a will should keep in mind that it is crucial to review that will regularly and to update it when necessary. Circumstances and laws are changing around us all the time, and these changes can sometimes render even well-drafted wills obsolete over time. Again, each review and update requires an investment of time and effort, and sometimes money, so it’s not wise to review and update continuously. The right frequency for each person will depend on a number of factors.
To help decide the right frequency for reviewing a will, a person should think about all the circumstances and decisions that went into making his or her current will. For example, the person’s state of residence was important because it determined which state law would apply to the will. Laws in effect when the will was drafted, including federal and state tax laws, also likely would have affected the content of the will, as would the person’s assets, liabilities, spending rates, age, family situation (marital status, number and ages of children, siblings, parents, etc.) and relationships with friends and charities at that time. This background information would have impacted many of the decisions that went into making the person’s existing will, including decisions about who should receive property and who should act as executor, trustee and/or guardian.
Once a person understands the circumstances and decisions that went into making his or her current will, it will be easier to assess whether a review or update is necessary. If any of those circumstances or decisions has changed, then the will likely should be reviewed, and possibly updated. In particular, we advise our clients to consider reviewing their wills (and their Durable Powers of Attorney and Healthcare Directives) if they move to another state or country, change marital status, significantly increase their net worth, learn of a change in the state or federal estate tax laws or change their intended beneficiaries, executors, trustees or guardians.
We’re here to help
We hope this basic information will help you think about your questions related to timing of making wills and other estate planning documents. The answers vary from person to person based on circumstances, so it’s impossible for us to provide a general answer or set of answers that will apply in every case. If you have any questions about whether it’s time for you to make or update a will, Power of Attorney or Healthcare Directive, we are available and ready to help answer your questions. Please call us at 203-325-4477 or email us using our contact form.