Yearly Estate Planning Audit

Kicking off a new year right involves more than just resolutions to get in shape and joining book clubs. One of the most important tasks we should tackle at the beginning of each year is to make sure that our estate plans are completed, up-to-date and easily accessible in time of need.

An image of a lawyer reviewing estate planning documents during a estate planning audit.

Your Annual Estate Planning Audit

When determining whether your estate plan is complete, it’s important to keep in mind that your plan involves more than just creating a Last Will & Testament or a Trust to account for your assets and physical possessions.

It also includes medical directive and guardianship documents to help your family make decisions on your behalf in times of illness or incapacity that align with your own wishes.

Examples of such documents may include advanced medical directives (living will and healthcare surrogate), fiduciary agent assignments, guardianship directives, etc.

You may recall the list provided in one of our prior articles, 4 Basic Estate Planning Documents.

There we examined the need to establish a last will and testament, durable power of attorney, living will and healthcare surrogacy documents at a minimum.

This list may expand depending on your unique circumstance, such as whether you have children, are married, divorced etc.

It is important that your estate plan reflects your goals as they are now and take into consideration your familial makeup.

 

Keeping your Estate Plan Up-To-Date with an Estate Planning Audit

If you’ve determined that your plan is complete, the next step would be to make sure it is up-to-date.

One of the most important messages we relay to each estate planning client before handing over their finalized and executed estate plans is that this is not a one-and-done process.

Estate plans must be revisited, even if briefly, on a yearly basis to ensure that nothing has changed in your life that would warrant your documents to be revised.

 

An image of a woman reviewing her estate planning documents as part of a yearly estate planning audit.

4 Important Considerations when determining if your estate plan is up to date:

1. Do you require any changes to named fiduciaries?

The most obvious change would be the need to replace a named fiduciary, such as an agent, personal representative, guardian etc., who has pre-deceased you.

However, less obvious reasons for making a change to your estate planning documents would be a change in mental capacity, health or financial ability to serve effectively in the assigned role.

For example, many young couples name their parents as alternative guardians for their minor children. But as the children get older, so do their grandparents and their ability to properly serve as a fiduciary may be diminished.

Another reason for a potential change may be you’ve experienced a falling-out or change in the level of trust with a named fiduciary. Remember, those named in your estate plan to serve in a fiduciary role must be fully trusted to act as you would.

2. Is your list of beneficiaries up-to-date?

This is most common when individuals have new babies who may not be named in their estate plan.

However, this list should also be updated if a beneficiary passes away. Newly remarried couples must also consider adding each other (or potential step-children) to their estate plans as beneficiaries (and fiduciaries, for that matter) and removing prior spouses.

This can be particularly problematic when a prior spouse was specifically named as a beneficiary but the plan was never updated.

3. Do you have a HIPAA authorization form to accompany any medical directives?

We’ve learned that this document is highly effective when convincing reluctant medical facilities to follow an individual’s medical directive.

Not all medical facility policies are created equally! Some may be more reluctant to share medical information, especially to a non-spouse.

As such, having a HIPAA authorization form, may help in a time of need. While not all attorneys include this document in their clients’ estate plans, they are becoming more popular.

So be sure to examine your plan and update it, if necessary!

4. Are there any new assets you would like to add to your documents or have your planning objective changed?

One of the most common reasons for amending estate planning documents is the need to include newly acquired assets.

While minor personal items may be added using an inventory list referenced in your will or trust, larger, more material assets (such as real estate etc.) may require a substantive revision.

Other considerations may be the need to reference newly acquired business assets, charitable contributions or wealth preservation as financial situations change.

If the answers to any of these questions would result in a need for amendments to documents, it is advisable to consult with your attorney immediately. Failure to timely amend your estate plan may potentially result in undesirable distribution of assets or assignment of fiduciary duties should you prematurely pass away.

An image of a person looking for important estate planning documentation.

Making your Estate Plan Accessible during your Estate Planning Audit

The final task would be to make sure that your documents are all accessible to those who will need to present them in a time of need. After all, what good is your plan if it is not accessible to or can’t be found by your loved ones who will need it to carry out your wishes?

While most law firms will keep electronic copies of your plans, the growing trend is to send original documents home with the clients.

It is advisable to keep copies in a safe location that may be accessed by loved ones and fiduciaries, such as a home safe or secured filing cabinet. Often times you may even give copies (not originals) of these documents to your loved ones directly.

Along with your estate plan, family members and fiduciaries may also need access to and lists of other information such as account numbers, bills to be paid, insurance information etc. For this reason, we often advise clients to keep the following information together with your estate plans:

 

  • Passports and Birth Certificates for all household members
  • Bank account numbers, mortgage information and utility account numbers
  • Social security numbers
  • Retirement and investment account information (statements including financial institution, account number and advisor’s contact information)
  • All insurances – medical, life, home, auto, etc.
  • Password lists for online accounts, social media etc.

Conclusions

If an estate planning audit seems too overwhelming a task to take on your own, you may choose to schedule a call with our attorney to assist you with the process.

Our goal is to make sure that all our clients can rest assured knowing that their plans are complete and up-to-date when needed by completing a comprehensive audit of each client’s estate plan.

 

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