Prepare to be amazed! May is not just any ordinary month - it's National Home Remodeling Month, the time of year when the National Association of Home Builders officially recognizes the tremendous value of home improvement projects. Springtime comes with spring cleanings and home improvement projects, but can also be a good time to consider updating your estate planning documents.
If you need to make small updates to your estate planning documents, such as changing the names of beneficiaries or decision makers, you may wonder whether you can take care of these changes on your own or if you should seek the assistance of a professional. Here are some things to consider before choosing which option is best for you:
If Your Name Changes
If you've changed your name due to marriage and/or your own personal preference, and your estate planning documents don't need to be changed, you may only need to keep copies of any legal paperwork reflecting the name change. Keep copies of these documents together with your estate planning documents. If you've remarried and want to change your name in your estate planning information, or if a trust you established has your old name in the title, it's best to consult an industry professional, such as an attorney, to ensure that the name change is properly handled.
If a Beneficiary’s Name Changes
Wondering what you should do if your beneficiary's name changes? Whether it is due to marriage and/or personal preference, staying on top of this information can save you from running into issues later down the road. While updating your estate planning documents is not necessarily critical, it may be necessary for your beneficiary to prove their identity with a court order, marriage certificate, or birth certificate. It is important to avoid making changes directly on your estate planning documents, such as crossing out a name and writing in a new one. This has resulted in confusion and has even prompted litigation in the past. Courts have had to weigh in on these types of edits to estate planning documents to determine their validity and intent. Even though it may seem harmless, unforeseen consequences can often arise when attempting to edit legal documents yourself.
Adding or Removing a Beneficiary
When events occur such as the birth of a child or the passing of a beneficiary, you may wonder if you need to update your estate planning documents. The answer is that it depends on the language in your documents. Some estate planning documents are drafted to anticipate future additions or removals of beneficiaries by name. It is highly important to seek legal advice before making any changes to your estate planning documents, as serious legal consequences can result from attempting to do so on your own.
Making changes without legal advice could result in unintentionally cutting off people from receiving an inheritance or having your property go to those who never intended to benefit. For instance, adding a spouse’s name to the list of children in your estate planning documents could lead to unintended consequences if the spouse remarries after the child’s death. The former in-law could become a beneficiary of the family trust and have certain rights regarding the trust’s administration, including the right to demand a copy of the trust documents and any financial accountancy. Once that share is paid out, the former in-law might use it in a way that it was not originally intended for, causing negative consequences from an innocent and well-meaning attempt to provide for an in-law.
Appointing New Trusted Decision Makers
In some cases, you may want to appoint new individuals to make important decisions about your property if you become incapacitated or pass away. However, it’s important to understand that certain legal documents cannot be amended easily. While it may be tempting to simply cross off the names of the people you want to remove and add new preferred decision-makers, this can actually void the document under certain circumstances.
If you need to make such important changes, it’s best to have the documents redrafted and executed with the same formalities used in the original documents, ensuring that you follow the applicable state law. For instance, your state may require multiple unrelated witnesses to the signing of a modified will, even if the change you’re making is a one-sentence amendment. The same is true for a codicil, which is an amendment to your will. Other legal documents, such as a power of attorney, a trust amendment, or restatement, may also require similar formalities, such as having your signature notarized.
Modifying Distribution Provisions
There may be times when you consider altering the distribution provisions of your will or trust by changing the percentage/fraction shares of your estate. It is important to note that this modification should be avoided when attempting to make such changes on your own. It is always advisable to consult an attorney if you wish to modify the distribution provisions of your will or trust. You must consider this amendment very carefully and execute it with strict documentation. Such a change to your estate planning documents carries the risk that a beneficiary who receives less under the amendment may challenge it and use any argument available to invalidate the changes. An experienced estate planning attorney will know the necessary steps to take to ensure that your legal documents will be honored by your beneficiaries and the courts after you pass away.
As you have seen, remodeling your estate plan without the help of a trained and experienced attorney can lead to many potential issues. When handled properly, these changes don’t have to be expensive. Your attorney can quickly and inexpensively fix some of these small issues by drafting an amendment to your estate planning documents. Other changes may require more work because the issues are considerably more complex than you first realized. In either case, with a legal professional guiding you through the process, you can be confident that you will not be leaving your loved ones with a legal mess to sort out after you are gone.
If you are uncertain about whether you need an attorney to help you modify your estate plan, we encourage you to contact us. We are happy to consult with you and help you determine what changes, if any, you may need to make.