Law Office of Jay Fleisher, P.A.

When to Change Your Will

Change your will to reflect your current wishes and situation.

It's time to write a new will if you're experiencing a big change in your life, such as moving to another state, getting married or divorced, moving in with a new partner, or bringing a new baby into the family. Your will should be tailored to your current family and financial situation, not the one you faced five years ago or maybe even just last year.

Here are some events that should nudge you toward making a new will and reviewing beneficiary designations you've made for insurance policies, bank accounts, and retirement accounts.

· You get married. You and your new spouse should create new wills when you get married. In most states, your spouse is legally entitled to claim a percentage of your property after you die, unless you have a written agreement to the contrary. This includes married same-sex couples in Massachusetts. If you don't want to leave at least half of your property to your spouse, see a lawyer.

· You are unmarried, but have a new partner. Without a will or alternate estate plan, such as a living trust, your partner will inherit nothing. To avoid this, you and your partner will probably want to make new wills. (Different rules apply if you and your partner are registered domestic partners in California, Maine, or New Jersey, reciprocal beneficiaries in Hawaii, or civil union partners in Vermont or Connecticut.

· You get divorced. In most states, a final judgment of divorce (or an annulment) revokes any gift made by your will to your former spouse. But in some states, it doesn't. So no matter where you live, you should make a new will after a divorce.

· You bring a new baby into the family. You'll want to make a new will to name a personal guardian for the little one. This is the person you want to raise your child in the unlikely event that both you and the other parent become available.

· You have new stepchildren. Unless you legally adopt stepchildren, they have no right to inherit from you in most situations. If you want to leave them a share of your property, you should adjust your will.

· You acquire or dispose of substantial assets, such as a home. If you leave all of your property to one or more people or organizations, there is no need to change your will as what you own changes. But if you've made specific gifts of property that you no longer own, you'll want to avoid leaving the intended beneficiaries out in the cold. (If you no longer own the property, the beneficiaries are probably out of luck; they won't get anything in lieu of it.) Likewise, if you obtain new property and you want to leave it to someone specific, you'll need to change your will to make your wishes clear.

· You're married and move from a community property state to a common law property state, or vice versa. Community property and common law property states view the ownership of property by married couples differently. This means that what both you and your spouse own may change if you move from one type of state to the other.

· You change your mind about who you want to inherit a significant portion of your property. If you decide to leave a share of your property to someone else, you'll need to create a new will.

Changing a Will

There are two ways to modify a will. One is to add a "codicil" to it. A codicil is a sort of legal "P.S." to the will, revoking part of it or adding a provision, such as a new gift of an item of property. Simple codicils made sense in the era of typewriters, when creating a brand-new will was a hassle, but today they are normally a poor idea. Codicils can create confusion -- sometimes even conflict -- and they must be dated, signed, and witnessed just like a will.

It's usually just as easy to make a new will. In it, you revoke your old one by including a simple statement like this: "I revoke all wills and codicils that I have previously made." It's also a good idea to gather all copies of your old will and destroy them.

Changing Other Estate Documents

Don't forget that much of your property will probably pass outside the terms of your will. For example, individual retirement accounts, joint or payable-on-death bank accounts, stocks registered with a transfer-on-death form, and life insurance proceeds go directly to the beneficiaries you've named. Your will has no effect on them. If you've changed your mind about who you want to inherit these kinds of property, you'll need to change the documents on which you named the beneficiary.

If you have a living trust and want to change its terms, you can add an amendment to the original document. You may then need to transfer property in or out of the trustee's name. Unlike a will, you do not usually revoke a trust and start over if you want to make a change.

Remember to review your entire estate plan periodically to see if there are any changes you want to make. Once a year would not be too often

Does your executor know how to find the things you've hidden?

When it’s time to wind up your estate, your executor will need to find information and items that may be hidden away or protected by passwords: everything from your electronic banking records to your email accounts, from your safe deposit box to a home alarm.

You can provide essential directions for your executor for each locked place, login, or security measure. Here are some tips to get you started.

Services and Products

Make a list of each service and product for which you have a user name and password or personal identification number (PIN). Common items include:

· computers

· Internet service providers or Web hosting services

· email accounts

· online services

· software applications

· cell phones and pagers, and

· personal digital assistants (PDAs).

For each item on your list, note your account name or number and any password or PIN that you use.

Home and Vehicle Security

List all the ways you protect your home, vehicles, or other property. Be sure to include the following:

· vehicle and home alarm systems

· home safes

· mailboxes or gates, and

· locked boxes, drawers, or cabinets.

For each item, note passwords, combinations, or the locations of keys.

Safe Deposit Boxes

If you have a safe deposit box, you’ll want to be certain that your executor knows where it is. But you should also think carefully about what you put in your box. Your executor may not have access to the box immediately after your death, so it’s usually not the best place to store information your executor will need right away, such as your wishes for burial or cremation, or your will.

When you’re comfortable with your safe deposit box arrangements, make a list of each box you currently rent. You’ll want to include the following:

· contact information for the bank or other financial institution

· a list of the people who have authorized access to the box

· the box number

· the location of the box keys, and

· a brief description of what the box contains.

Other Assets, Other Locations

Think about any other property you may have safely hidden away. What little-known arrangements should you map out for your executor? Be sure to make a list of:

· financial assets that are not stored at a financial institution

· valuable items that your survivors may not find without direction, and

· other information known only to you -- such as special recipes or a map to buried treasure.

Describe each item, its location, and the location of any documents related to the item -- such as appraisal records or a storage agreement.

Keeping Your Information Safe

You can keep this sensitive information away from prying eyes by making sure that only your executor and others you choose will have access to it. Store your list of protected products, services, and places in a secure location, such as a waterproof, fireproof home safe. Then be certain to tell your executor -- and any other loved ones who may need the information to care for you or your property -- how to get to it.

Erase sensitive information. If you make your list of passwords and other information on a computer, remember to delete the files from your hard drive when you’re finished. You can store the list on a disk or CD that you keep with the list itself.

Remember to update your information periodically, listing new protected products, services, or places, and noting any changes to existing arrangements.

It's a myth that your 501(c)(3) nonprofit organization can't make a profit, but some of it may be taxable.

Nonprofit corporations, by definition, exist not to make money but to fulfill one of the purposes recognized by federal law: charitable, educational, scientific, or literary. Under state and federal tax laws, however, as long as a nonprofit corporation is organized and operated for a recognized nonprofit purpose and has secured the proper tax exemptions, it can take in more money than it spends to conduct its activities.

In other words, your nonprofit can make a profit. Whether or not a nonprofit's income is taxable depends on whether the activities are related to the nonprofit's purpose.

Making a Profit From "Related" Activities

Tax-exempt nonprofits often make money as a result of their activities and use it to cover expenses. In fact, this income can be essential to an organization's survival. As long as a nonprofit's activities are associated with the nonprofit's purpose, any profit made from them isn't taxable.

Let's take as an example a group called Friends of the Library, Inc. It's a 501(c)(3) nonprofit (which means it has a federal tax exemption), organized to encourage the appreciation of literature and to raise money for the support and improvement of the local public library. It makes a profit from a lecture series featuring famous authors and from an annual sale of donated books.

Because these activities are educational and literary in nature, they do not jeopardize the group's tax-exempt status, and the proceeds from them are not taxable. The organization may use this income for its own operating expenses (including salaries for officers and staff) or for the benefit of the local library. What it cannot do is distribute any of the income to the nonprofit's officers, directors, or others connected with Friends of the Library.

Making a Profit From "Unrelated" Business Activities

Sometimes nonprofits make money in ways that aren't related to their nonprofit purposes. While nonprofits can usually earn unrelated business income without jeopardizing their nonprofit status, they have to pay corporate income taxes on it, under both state and federal corporate tax rules. (Generally, the first $1,000 of unrelated income is not taxed, but the remainder is.)

Let's go back to the Friends of the Library nonprofit corporation for an example of unrelated income. People donate many thousands of books to Friends of the Library for an annual book sale, one of its major fund raising events. Although the sale is always successful, one year thousands of books are left over, and the nonprofit decides to sell the more valuable of these books by advertising in sources for rare and out-of-print books. The response is overwhelming, and before long the nonprofit has six employees cataloging books for sale. Soon, Friends of the Library finds itself in the business of buying books from other dealers and reselling them to the public. The nonprofit will have to report these earnings to the IRS, which will tax them as income from unrelated business activities.

In some situations, excessive unrelated business activities can also prompt the IRS to reconsider a nonprofit's 501(c)(3) tax-exempt status. To avoid this, a nonprofit should never let its unrelated business activities reach the point where it starts to look like a regular commercial business. For instance, unrelated business activities shouldn't absorb a substantial amount of staff time, require additional paid staff or volunteers, or produce much more income than that generated by the organization's exempt activities.

Activities That Are Not Taxed

Because the difference between "related" and "unrelated" activities can be confusing, the IRS has said that some activities will not be taxed, even if they aren't related to the nonprofit's purpose. Here's a quick rundown of the activities that aren't taxed:

· activities in which nearly all the work is done by volunteers

· activities carried on primarily for the benefit of members, students, patients, officers, or employees (such as a hospital gift shop for patients or employees)

· sales of merchandise that has been mostly donated to the nonprofit (such as a thrift store)

· the rental or exchange of mailing lists of donors or members, and

· the distribution of items worth less than $5 as incentives for donating money (such as stamps or pre-printed mailing labels).