Why Baby Boomers Need To Review Your Estate Plan (& Everybody Needs To Write One)
Writing a will is non-negotiable for everyone, whatever their age, but here’s why it’s almost as important to review your estate plan regularly.
According to surveys, the majority of New Year’s resolutions revolve around losing weight or saving money, but the 57% of Americans who are currently set to die intestate should make just one resolution: Write. Your. Will.
I know, those are awkward things to say in public, but now we’ve put it out there. You need to write a will. No matter how old or how young you are, you need a will. Your children, grandchildren, siblings, friends, or good causes that you’d like to donate to need you to write a will. Resolving to write a will is possibly one of the most altruistic resolutions that you could make this year, but a recent survey revealed that 22% of Americans aged over 65 do not have a will. And if you are feeling smug because you already wrote your will, let us ask you this: When did you last review it?
I know that once you’ve written a will you’d rather just forget about it, and you do win points for having written the thing in the first place (unlike the 57% of you reading this who still haven’t done so), but a will can become out of date scarily quickly. There is no use leaving it to become out of sync with your life circumstances or invalid because of changing laws.
Estate planning advisers recommend that you should review your estate plan every 5 years, or whenever there’s been a significant change to your financial or familial circumstances (for example, birth of new grandchildren, a divorce or remarriage, moving to another state, winning the lottery) that could make you want to change the distribution of your assets. Remember to also review the named beneficiaries on financial vehicles such as your 401(k), life insurance policies, IRA or pension plans, since they will pay out to the named beneficiary even if that is different to the person named as the heir in your will.
Don’t overlook reviewing your executor and fiduciaries, either. Perhaps the close friend whom you relied on to oversee the distribution of your assets has drifted out of touch, or you no longer see eye to eye, or he/she is no longer strong enough to fill that role. Make sure that the person you have named to carry out your wishes is still able to do so, and is still the person you want to do it. The same goes for your back-up executor (you should always name a back-up executor).
If you have recently seen your assets increase (through shrewd investment, inheritance, etc), then you might need to do quite a thorough overhaul of your estate plan in order to deal with the new possibility of having to pay estate tax when perhaps you used to be below the threshold. Equally, if your assets have recently gone down a lot in value, you probably need to review your estate plan just as thoroughly to work out how to leave your heirs the amounts that you’d like. For example, if your estate is going to be worth a lot less than you originally expected, you might change your mind about leaving a bequest to your alma mater and instead leave that money to your children.
Even if nothing has changed in your circumstances and your will is the most watertight will ever, you still need to review it regularly because tax laws can change. Changing tax laws, new rules about spousal inheritance, and rearranging of inheritance tax laws can change the way that your estate will be treated after you die and can result in your beneficiaries being denied the assets you had intended them to receive.
Writing in Forbes, Kaycee Kristy spells out better than I ever could the even deeper reason why baby boomers need to review their wills as they get older. What you put in your will is not just about how your assets will be carved up between your heirs; it’s about reflecting your real values.
In midlife planning tends to be mainly about making sure your affairs are in order and leaving enough for those left behind. If you have kids, their needs are front and center. Now, as boomers enter into transition, new perspectives and different priorities emerge. Today, it’s more about you, your security, and your legacy.
As you reach senior-hood, you might want to completely restructure your will. The need to leave the bulk of your estate to support your children might not be your biggest concern any more, and instead, your thoughts turn to supporting a charity through leaving a legacy. You might also have a better idea of how much assets will be available, so that you can now think of planning for legacies rather than focusing with panic on the fear of running out of money before you die.
Most of all, make sure that your estate plan is still set up to distribute your assets and reflect your values exactly as you wanted. Write. Review. Relax.