Whether you’re part of a new startup tech company, expanding an already established business into a new location or industry, or preparing a new product launch, updating your will is a prudent financial decision.
Since entrepreneurs also lead lives outside of their business, you may need to revise your will after a life event like having a child or getting married. If you’re an entrepreneur and you want to know when and why it’s critical to update your will, keep reading.
When starting a new venture or gaining assets
Many circumstances cause an entrepreneur to see a substantial increase or decrease in their net worth. When a new product begins taking over the market, a new location is opened, or a large acquisition or sale is made, it may be time to update your will.
For starters, any amount over $5 million per person will exceed the estate tax exclusion amount. You may want to donate some of the newly acquired income to charity or redistribute some of the wealth in your will. Even below $5 million, capital gains and related taxes can be addressed with an updated will. You will also want to reconsider how your wealth is dispersed amongst your loved ones after the loss of an asset to ensure the accuracy of their inheritance.
After moving to a new state
The laws and regulations for how a will is handled, including the property and inheritance taxes, vary from state to state. To ensure that your will maintains its validity in the event of a move, you should consult an attorney who practices in your new state.
Whenever tax laws are changed or updated
Federal tax laws are hard to keep track of and constantly change. As laws change, so may the best strategy for executing your will and distributing your wealth and assets. Since most people are unaware of changes in estate tax law, it’s wise to periodically consult with an attorney to update your will.
After a significant life event
The most important moments in your life should go hand-in-hand with an update to your will. For example, after the birth of a child, a will revision may be the last thing on your mind, but it’s one of the most critical steps you can take to securing their future. Without adding your children to the will, they may never receive their full inheritance if an unfortunate event occurs.
When you are married, divorced, or remarried, the same applies. If you pass after being married, your spouse receives rights to your estate, but without a will, you’re unable to define precisely which assets go where, and things become even more complicated when you have children together or even children from a previous marriage. Juggling family and business is difficult, so it’s always a good idea to make an appointment with a knowledgeable attorney to review your will.