You know how there are some things in life that you really only need to do once and not feel compelled to ever do them again? Wisdom teeth removal, home perms, and puberty all come to mind here. However, other things that might seem like “one-and-done” issues actually bear repeating. For example, how often should you review your estate documents? We recommend every 2-to-3 years and sooner if you have a significant life event such as marriage, birth of child, loss of spouse, disability in the family, or you inherited a boat-load of money! What should you be looking for? Can you do this without professional help? I’m so glad you asked!
With the myriad of legal documents in a complete estate plan, you may be intimidated to even start the process. Let’s see if we can simplify this for you so you’re more comfortable with what to check. We will address [1] your financial and health decision-makers, and [2] who gets your stuff when you die.
Your health and financial “agents.” An agent is someone who can legally act on your behalf when you are unable to do so.
- Pull out your Power of Attorney. Who is your agent? It may have been your older sister, but as you have aged, so has she. Might there be some mental capacity issues now or in the foreseeable future (setting aside your lifelong assertion that she was a little nutty)? It might be prudent to find a younger person. Also, review the successor agents to see if they are still the ones you want in the event that your primary agent is unable or doesn’t want to serve.
- Same goes for your Health Care Directive. Review your health care agents, who’s in first position, their backup, etc.? Do the people you’ve designated still meet your desires?
- Will and/or Revocable Living Trust. You know the drill now – do you have the right people listed? If you have a Revocable Living Trust, you are probably the current trustee, and here you want to look for the successor. Check the people, check the order . . . all according to your desires?
How about your heirs? They are listed in your Will and/or your Revocable Living Trust. If you have a Trust, look here first. If you don’t have a Trust, then go to your Will.
- Single or widowed. Check the “upon death” article in your Will or Trust. After payment of debts and funeral expenses, who will inherit your assets? Children? Other relatives? Maybe some to charities? Does this still fit your wishes? Are there issues with any of your heirs such as substance abuse or maybe legal problems with any of the charities?
- Married couple. Look to see what happens when the first spouse dies. Everything goes to your spouse? Or maybe you fund a trust with your share of the assets with income going to your spouse but protecting the principal for your children. For issues related to heirs upon the death of the surviving spouse, see “single or widowed” above.
Check your IRA, 401(k), annuity, and life insurance beneficiaries. This is a very important step in your estate plan review. These are not controlled by your Will or Trust. For these documents, the asset goes directly to the named beneficiary.
Go ahead, pull out your estate documents. Over your morning coffee or tea or maybe your evening glass of wine, open them up to check the “agents” and check the heirs you’ve designated to see if anything needs updating.
If that’s still too intimidating, schedule an appointment with your financial planner who will be able to guide you through the documents to see if your existing plan meets your needs and explore if changes need to be made. If you decide to make changes, it’s time to make an appointment with your attorney.
If you would like to review your estate documents with a team member at Inspired Financial, we are here to help. We are not attorneys and do not practice law, but we can guide your estate planning process and if you want to make changes, we are happy to coordinate that with your attorney.
Now that that’s done, we’ve been meaning to talk with you about that home perm…
“I’m a problem solver and pride myself on my ability to recognize tax nuances, evaluate complicated estate and tax planning issues and provide sensible easy-to-understand solutions that fit each unique client situation. 95% of financial planning has tax implications, and most wealth management firms do not have the estate and tax horsepower that we have at Inspired Financial.”
