Like many aspects of life, estate planning is an ongoing process that should evolve as you age and as your circumstances change. Major life events such as marriage, birth, divorce, sickness and death will likely impact legacy decisions for your estate or change the agents you entrust to make important decisions on your behalf. Reviewing your estate documents periodically can help ensure your wishes are honored and your loved ones are protected.
A common practice begins with a review of all accounts and policies where you have designated a beneficiary. This includes all retirement accounts such as 401(k)s and IRAs, as well as annuities, life insurance policies and any investment or bank accounts with a “transfer on death” (TOD) or “payable on death” (POD) designation. This step is critical because beneficiary designations for these accounts determine who will receive the assets upon your passing, regardless of the language in your trust or will.
If you own annuities, review them carefully for any “step-up” provisions or enhanced death benefits. These features can materially affect the amount your heirs receive and may influence where the annuity continues to be a valuable component of your overall estate plan.
Your designated agents, such as those named in powers of attorney (POA), healthcare directives, or as trustees, play a vital role in carrying out your financial and medical decisions should you become incapacitated. Ideally, your primary agents should be individuals you trust, who live reasonably close and who have the time to fulfill these responsibilities. For retirees, we recommend that these agents be around your age or younger to help ensure they are available and capable when needed. Have a successor agent named as well, so that the unexpected unavailability of your primary choice does not derail your risk management plans.
Your agents should be aware of their responsibilities and have a copy of the document that provides them with their powers. Every three or four years (or with a life-changing event), you should review the power of attorney and health care documents and verify with your agents that they are still capable of serving. Keeping these documents up to date helps prevent any future complications for your loved ones and ensures your plan reflects your wishes.
Estate planning is a team effort between you, your attorney and your financial advisor, to ensure your accounts, policies and legal documents effectively protect your assets and beneficiaries. By regularly reviewing and updating your estate plan, you can have confidence that your legacy is achieved and your loved ones are cared for. If you do not yet have an estate plan or you would like to review documents, please reach out so we can discuss the most appropriate course of action for your situation.
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