I wouldn't use "update" since it imply that there is a modification of the value in the original record. This is possible with mutable field of course, but I think the feature of OCaml (and apparently, SML#) you're talking about is the `with` keyword:
# type foo = { bar: int ; baz: string };;
type foo = { bar : int; baz : string; }
# let a = { bar = 42; baz = "hello" };;
val a : foo = {bar = 42; baz = "hello"}
# let b = {a with baz = "bye"};;
val b : foo = {bar = 42; baz = "bye"}
# a;;
- : foo = {bar = 42; baz = "hello"}