For Estate Planning, There is No Fix-It-And-Forget-It
It's hard to believe that people who spend a lifetime working hard to accumulate wealth spend little or no time planning for what will happen to it after they pass, especially if children are in the picture. Yet a recent Consumer Reports survey tells us that 86% of people have not reviewed or updated our estate documents in the past five years.
A lot can happen in five years - your life, the law and your assets will change -- and your estate plan needs to reflect the changes in your life or those of your beneficiaries. Here's what needs to be evaluated at least once a year.
Title to your assets. The most important part of your legal planning isn't necessarily the legal documents your lawyer prepared (though they are important), it's how your assets are titled. If your assets are not titled right (and stay that way), your estate plan won't work and the documents aren't worth the paper they are written on. This must be reviewed every year.
Your will and trust(s). These legal documents determine who gets your assets and who will take care of making sure that it happens the way you want. People marry, divorce and fall out with family members all the time. Children are born and sometimes, tragically, die. Property is bought and sold. In other words, life changes and so should your will and trust, to reflect the changes in your life.
Your health care directive. Your health care directive names someone to serve as your agent in case you are unable to make your own health care decisions. Is the person you originally named still willing and able to serve? If for some reason they were not able to serve when needed, have you named a back-up?
Your financial power of attorney. This is the person who will handle your finances in case you are unable to do so, and there should be a back-up named for this function as well. If you are over the age of 65 and have a number of different bank and brokerage accounts, it may make sense to consolidate those accounts to make managing your finances easier.
Your guardian nominations. As your children grow, the people you named to raise them may not continue to make sense. And, you absolutely need to have named guardians for the immediate term, so your kids are never taken into protective custody by strangers, and those folks can change frequently as the people in your kids' lives will likely change regularly.