Nothing says summer like the 4th of July, swimming pools, hot dogs – and reviewing your estate plan. Ok, maybe there isn’t anything seasonal about updating your will or thinking about beneficiary designations. But like most maintenance issues, if we wait too long, it can become a big problem really fast.
One of the biggest challenges we face is getting people to understand how broad this topic is. In most cases when you mention estate planning, people think you mean the thick envelope or three-ring binder of papers they got from an attorney 10 plus years ago. Or, maybe you’re the one who has been avoiding the topic altogether for the last 10 years.
While this may not be the “feel good” newsletter article of the summer, please take a few minutes and think through the following checklist of items. If you can honestly say you are current and have them all well addressed, then have another hot dog and get back in the pool (after waiting 30 minutes).
- Passage of Time: Think about how old you and your heirs were when you last thought about all of this. Were you kids minors, were they married, did you have grandkids? The plan you had then may or may not accomplish what you would choose to do now. I generally recommend you re-think where you are every five years (unless events demand changes sooner). None of us can see far into the future, and our planning shouldn’t attempt to either.
- Beneficiary Issues: You likely have one or more assets that your will (or trust) has no authority over. In most cases, IRAs, life insurance policies, annuities, pensions, 401(k)s, and other assets operate outside your normal estate plan. The distribution of these assets will be controlled by the specific beneficiary designations on each asset. We see more unintended mistakes and missed planning opportunities in this area than almost any other.
- Ownership Issues: How things are owned matters. If you have a trust, does it own everything it’s supposed to own? If an asset is an account or has a title, its ownership needs to align with your overall plan. Have you decided to put adult kids on any of your existing accounts? This often seems like an easy way to let them help, but it can cause unintended consequences if not executed properly.
- Tax Issues: Oddly enough, most of the really good tax planning for your estate should be accomplished long before you pass. Most of us have our retirement savings spread around in different types of accounts. By choosing which dollars you will spend first, you are deciding what will be left to pass on, and how it may be taxed. Also, whether you’re giving to charities from your retirement accounts or helping your kids/grandkids with important goals like education, knowing what you value and what outcomes you want to see is a vital part of your plan.
- Family Issues: Life brings all kinds of surprises to the table. Maybe you have 20 grandkids, maybe you don’t have any (keep asking – kids love it when you ask!). All kinds of events can happen that should trigger you to reconsider your plan. Have any of your heirs passed, had additional children, experienced a divorce, had a significant health change, experienced significant legal issues, become incapacitated, or any other changes?
Good planning is much more than making sure the right people get your stuff. It really is about passing on your Values First, and then your resources to support those values. If you need help updating your plan or thinking through a family challenge – let us help!