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Do you need a will? Do you need to update your will?

| October 24, 2016
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Estate Planning

Lately, I’ve had a few clients asking about wills.  While I am unable to provide legal advice, I often refer clients to an attorney when the topic of estate planning arises.

 

I find many clients don’t have a will and wonder if they need one.  I find many other clients have not updated their will in a very long time and wonder if it’s time for an update.

 

The will is a legal document that outlines how your property will be distributed as well as who will care for your minor children at your death.  It is important to note that if you own property with a joint tenant with rights of survivorship, that property will pass outside of the will to the joint tenant at your death.  For example, if you own a brokerage account with your spouse and the title is joint tenants with rights of survivorship, the account will pass to the surviving joint tenant at the first death.  Also, if you have named a beneficiary, the account will pass to the beneficiary and is not dictated by the terms of your will and avoids probate.  One of the most common mistakes that I see in estate planning is failing to name or update beneficiaries and contingent beneficiaries on your insurance policies, bank and investment accounts.

 

Who needs a will?

 

According to the College for Financial Planning, you may need a will if you are over age 18 and:

  • You have minor children
  • You own property that does not have a joint tenant or beneficiary listed
  • You have a spouse that is not a US citizen
  • You own a small business
  • You own property in multiple states

 

You may need to update your will if:

  • You did not properly execute your will – in Washington, this means it must be signed in front of two disinterested witnesses
  • You need to add or change a beneficiary
  • You need to add or change a guardian for a minor child
  • You need to add or change an executor or trustee
  • You have gone through a substantial life change such as a divorce or your health has deteriorated
  • The will was created when your children were under age 18 and they are now over the age of 18
  • There has been a significant tax law change since your will was drawn
  • You have moved to a new state since your will was drawn
  • You have purchased property in another state
  • Your assets have appreciated above the state or federal estate tax threshold including the value of all of your property including life insurance (WA state estate tax kicks in at $2 million and the Federal estate tax kicks in at $5.45 million in 2016)

Source: College for Financial Planning: Estate Planning Process and Goals

 

Washington state is a community property state, which means that most assets earned during the marriage are equally owned by both spouses.  At death, each spouse owns half of the assets and the will may or may not direct community property to the surviving spouse.

 

The distribution of a will is supervised by the court system in a process known as probate.  Probate can generate some legal costs and can take between 4 and 12 months to complete in Washington state.

 

Two additional documents that often accompany a will are:

 

A durable power of attorney is a document that gives one person the power to act for another person.  This can be an important document if you are incapacitated, disabled or impaired.  It can also be important for those with diminished capacity and those in active military duty.

 

A health care directive, sometimes called a living will, helps express your health care wishes if you are incapacitated.  This document will often include provisions about whether you want to be kept on life support.

 

Please contact me if you have questions about your estate plan and I can provide a list of attorneys that provide legal advice.

 

Source: College for Financial Planning: Estate Planning Process and Goals

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