Outdated legal documents can wreak havoc on estate plans. Residents of Chester, Pennsylvania, are reminded to review their wills or powers of attorney to ensure that everything is up to date. Having an accurate and effective estate administration plan can prevent disasters that could have negative effects otherwise.
A recent study found that many Americans forget to update their will after they have signed it. As circumstances and tax situations change, the need to keep those documents current should be a top priority. There are four documents that require attention: a will, trust, health care directive, and a financial power of attorney.
Life-changing events such as a divorce or new purchased assets and properties should be reflected in the will. As heirs change, a will should reflect the changes. A good strategy for major purchases is the use of a separate personal list of all tangible properties. Listing, dating and initialing each new entry on a property list is a cost-effective means of updating properties in a will.
Trusts are another good reason to revisit a will. Experts agree that acquiring new assets and new family members are better addressed in a trust, which is more flexible in dealing with estate complexities. Often, trusts allow testators to define and specify instructions on how assets are to be distributed to specific beneficiaries. It can also take effect while the testator is still alive. Also, assets held in a trust generally prevent expensive and time-consuming probate and its associated legal issues.
Finally, health care directives and a financial power of attorney are powerful tools that assign specific trusted individuals the power to make important decisions on behalf of a testator in case of incapacitation. As there could be changes in the family dynamics, both documents have to be reviewed and updated when necessary to ensure that health and financial decisions continue to serve the purpose of the testator. One good tip is to also name possible back-up people to act in the testator's best interests.
Estate planning is an important end-of-life strategy and its main purpose is to serve the testator's and his or her beneficiaries' best interests. Having a knowledgeable and trustworthy legal professional as an ally can prove beneficial in creating, modifying and enacting those important estate planning tools.
Source: Market Watch, "Make your heirs happy: Update your will," Elizabeth O'Brien, May 8, 2013