These legal documents can’t just be put in a drawer and forgotten for years and years. They need to be tended to periodically, or else they may cause problems when you need them the most.
By: Jedediah McClure, JD
Key Points
- Ongoing Review: Regularly review your estate plan to ensure it remains current with your life circumstances and legal requirements.
- Asset Ownership: Confirm that your asset ownership aligns with your estate plan.
- Beneficiary Designations: Periodically update beneficiary designations to reflect your current wishes.
Important Definitions
- Estate Plan: A set of legal documents that outline your wishes for asset distribution and management of your affairs after death or incapacity.
- Revocable Trust: A trust that can be altered or revoked by the grantor during their lifetime.
- Beneficiary Designations: Instructions for who should receive certain assets upon your death, such as retirement accounts and life insurance policies.
Maintaining Your Estate Plan
Congratulations! You’ve been meaning to create an estate plan for a long time — and now you finally have a health care advance directive, a durable power of attorney, a will, and maybe even a revocable trust. You’ve accomplished something important for you and your family, but you are not done yet. Here’s what you need to do to maintain your estate plan:
Review Asset Ownership
Your estate plan should take into account how you own your assets. You want your loved ones to have easy access to your assets in the event of an accident, incapacity, or death. Depending upon your estate plan and your circumstances, perhaps your accounts should be owned jointly with a loved one. You might also add your attorney-in-fact (named under a durable power of attorney) to be an authorized signer on your account. Or, if you created a revocable trust, you probably should consider transferring ownership of most of your individual financial and investment accounts, and perhaps other assets as well, into the name of your revocable trust.
Check Your Beneficiary Designations
Many assets pass upon death by beneficiary designations. These assets include retirement accounts — like IRAs and 401(k)s — life insurance policies and annuities. Most major financial institutions now allow you to name a beneficiary on non-retirement investment and financial accounts as well, which is known as TOD (or transfer on death).
It’s always best to periodically check these beneficiary designations to make sure they accurately reflect who you’d like to receive a particular asset upon your death. Incorrect beneficiary designations are a fairly common occurrence — and mistakes can be costly to fix after someone dies, if they are even possible to fix at all.
Is Your House Your Homestead?
Many states allow you to declare your primary residence as your homestead. Depending upon your state of residence, there can be many advantages to declaring your homestead, such as creditor protection or lower property taxes. Homestead benefits vary drastically by state, and it’s possible they can have an effect on who can inherit as well. It’s best to consult a local adviser to help you figure out if a homestead is worthwhile in your state.
How Long Will Your Estate Plan Last?
Your estate plan will likely need to be updated at some point. An estate plan represents a snapshot of your life at the time you create the plan, in conjunction with applicable laws then in effect. As time marches on, changes in your life (or the law) can affect your estate plan. Therefore, it’s important to periodically review your estate plan to make sure it’s still appropriate. Perhaps someone you named in an important role, such as Executor or Trustee, has become sick, or you are no longer close with that person. Perhaps one of your loved ones is getting divorced, has creditor issues, or has become disabled. A whole variety of things can happen to necessitate updating your estate plan.
A good rule of thumb is to review your estate plan every five to seven years or whenever you’ve had a major life or financial change, such as a divorce or the birth of a child, or even if your parent has passed away and you are receiving an inheritance. You should review your plan with an attorney who can advise you what, if any, changes may be necessary.
What Happens if You Move to a Different State?
This is a fairly common question. The good news is that a valid document (such as a will, durable power of attorney, health care document, or trust) in one state, is also a valid document in another state. However, the particular document might not contain all of the necessary provisions in the new state, and therefore, the document might not work as well or as expected in the new state. For example, the state you live in might not require that a power of attorney be signed in front of witnesses, while your new state does require witnesses. This means your power of attorney might not work in the new state when you need it most. Therefore, if you move to a new state, it’s always best to have your estate plan reviewed for possibly helpful or necessary updates.
Where Should You Keep Original Documents?
You should keep your original documents somewhere safe, yet accessible, like a locked safe in your home or perhaps with your attorney if he or she is willing to hold on to it for you. In most cases, you should avoid keeping the originals in a bank safe deposit box, unless someone other than you and your spouse is a co-signer. A court order is necessary to obtain an original will from a safe deposit box after someone dies if there is no co-signer. For health care documents and trusts, originals have become less important. Copies typically work the same way as an original. However, when someone passes, an original will still must be filed with the court. Although, with extra paperwork, time, and effort, it’s usually possible to get a court to accept a copy of a will. Durable powers of attorney are really the exception to this trend. You often need an original power of attorney to be able to use it. So, mind your originals. That way you have them when you need them.
Who Should Have Copies?
In addition to your originals, you should have a fully executed copy of your estate plan (including a digital copy). While copies may have a more limited use than originals, they are important to have so that other family members know what their roles are when the time comes. In addition, if provided copies of your documents, the family will know your intentions and not be surprised by the terms, which could limit future fights.
Consider giving a copy of the documents to the people with important roles in the estate plan (such as executor, trustee, health care agent, and power of attorney). If you are uncomfortable doing so, at least make sure the named people know their roles and who to contact if something happens to you. Some people (but not most) give copies of their plan to their children. The most important thing is that your loved ones know who is in charge if something happens to you and where to find the documents to ensure the plan you’ve taken the time and energy to create can be properly implemented.
You’ve done the hard part, so don’t stop now. Periodically review your estate plan to make sure everything is still in order, and if not, make the necessary changes with your attorney. A little routine maintenance will go a long way toward your goal of ensuring your loved ones are taken care of when you’re gone.
Frequently Asked Questions (FAQs)
Q: How often should I review my estate plan?
A: It’s recommended to review your estate plan every five to seven years or whenever you experience a major life or financial change, such as a divorce, birth of a child, or receiving an inheritance.
Q: What should I do if I move to a different state?
A: While a valid document in one state is generally valid in another, the new state may have different requirements. It’s best to have your estate plan reviewed by an attorney in the new state to ensure all provisions are compliant and effective.
Q: Where should I keep my original estate planning documents?
A: Keep your original documents in a safe yet accessible place, such as a locked safe at home or with your attorney. Avoid keeping them in a bank safe deposit box unless a co-signer can access them.
Q: Who should have copies of my estate plan?
A: Provide copies to the people with important roles in your estate plan, such as your executor, trustee, health care agent, and power of attorney. Ensure they know their roles and how to access the documents if needed.
Q: What happens if I don’t update my estate plan?
A: An outdated estate plan can lead to complications, such as incorrect beneficiary designations, ineffective documents, or the wrong people managing your affairs. Regular updates ensure your plan remains effective and aligned with your wishes.
Q: How do I know if my estate plan needs an update?
A: If you experience any major life changes (marriage, divorce, birth of a child, death of a beneficiary), significant financial changes, or changes in state or federal laws, it’s time to review and possibly update your estate plan.
Take Action Now
If you need assistance with reviewing or updating your estate plan, contact me today. At Supernus Law, we specialize in ensuring your estate plan remains current and effective. Schedule a consultation with me, Jedediah McClure, to discuss your estate and make any necessary updates.
Contact Information:
- Phone: (618) 354-0302
- Email: jed@supernuslaw.com
- Website: Supernus Law Website
Don’t let your hard work go to waste. Regularly maintain your estate plan to protect your legacy and provide peace of mind for you and your loved ones.
DISCLAIMER
This post is for informational purposes only and is not intended as legal advice. Please do not act or refrain from acting based on anything you read on this site. You should always seek competent legal counsel before taking any legal action. Using this site or communicating with the Supernus Business & Law Center, LLC through this site does not form an attorney/client relationship.
