Mo Vidwans
By Mo Vidwans
The title assumes that you have one. I would imagine that you have given it serious thought since I have urged many times here in these articles to take it seriously, and get an estate plan on paper, sooner than later.
If you have an estate plan, that is not the complete story. Just like everything else in life, you must go back and review your plans to make sure that they reflect your intentions today and not what they were years ago when you first wrote the plan. Times change, circumstances change and more importantly we change as we grow and our family dynamics and, hence, our outlooks on life change.
Relatives pass on, new friends come on the horizon and our ideals and philosophy change. Everything, including our lives, is always in flux. We need to and we do react to that but even more importantly it should be reflected in our estate documents and plans as well. Say you have a Will and POA and all other necessary documents including beneficiary designations, but your heirs could still find themselves in a morass. Worst yet, some of your estate could end up in the hands of wrongful heirs, especially if there are divorces and sudden deaths involved.
You may have noticed that hardly a month goes by when we learn that a celebrity died without a Will. An example is the legendary musician Prince, who died suddenly in April 2016 without a Will. Because of that his estate was litigated for years and just got settled finally within the last few months. Compare that to Michael Jackson, who died in June 2009. He had iron-clad documents, and everything was settled within six months.
I do not even wish to bring out the mention of Howard Hughes, who was an eccentric billionaire, and his estate was contested for many years. Reviewing and updating your documents, Will, POA etc., regularly is an important activity and needs to be done with all the seriousness of taking a test. The question that needs to be asked and answered is what is in the documents, and does it still mirror your wishes and current thoughts?
The basic components of an estate plan include at the minimum a Will, a POA and healthcare authority and a few other documents. They all have their individual specific purpose and need to be executed with some thought behind it. Some families use living trusts if they have a need to manage their assets long after they pass-on. But whether your estate is simple or multi-layered, my strong suggestion would be that you should review all such documents every three to five years or perhaps more often when you experience a major life change. Below is a list of items to check on just for such purposes.
Designation of Beneficiaries
This used to be an ignored area, I will say, about 25/30 years ago. It was astonishing to me that such an important piece of information was missing from many documents only because we didn’t have the knowledge to insist on it and the institutions didn’t care much at that time. I am happy to tell you this is not the case today. But it still behooves you to make sure that, no matter what financial document it is, beneficiaries are seriously considered and jotted down.
Planning Checklist
As I mentioned above, here is a checklist to follow to determine if you need to review and reconsider your estate documents.
• Have you recently moved to another state for your job?
• Have there been any new marriages or divorces recently because of which your family is affected? For that matter have there been any deaths in the family?
• Since you drew up your documents, have there been any Federal or State laws changes? There have been many changes in the last 3-4 years and there is a possibility of more after 2025.
• Do you need to update your Will and Power of Attorneys for financial or health reasons, especially if your documents are more than 10 years old?
• The individuals named as beneficiaries and fiduciaries in your documents are still the right people to handle your affairs or do you see a need to change those assignments.
• If you have promised your special furniture or jewelry or heirlooms to someone and it is not recorded yet in documents, then it needs to be done. Vacation homes, especially on a lake or oceanfront are notorious for struggles.
• Have you documented all your assets and its access details in one place somewhere for fiduciaries to reach? Do they know where they are, and have you discussed it with them?
• Have you rethought your ideas about your medical conditions and what should happen under what circumstances? All this needs to be conveyed to the right people and documented or updated in your existing documents.
Adult Children
When children cross the magic threshold of 18 (or 21 depending on the state) many things change and you may not realize it, especially if they are going to another state or even to another town in the same state for their schooling. Not only do they need to have their own set of similar documents as we have been discussing but you need to have HIPAA permission from them to access their medical information, otherwise it will be denied to you. This always has an element of unpleasant surprise to many parents. It does take some time to sink in that they are not the children we would have liked them to be forever, but they live, or would like to live, their own lives now and it may not be by your standards and/or rules.
Mo Vidwans is an independent, board certified financial planner. For details visit, vidwansfinancial.com, call 734-476-0579 or write to: [email protected]
