The Third Guarantee: Change

An often-heard quote about lifetime guarantees is the one about death and taxes. I would suggest that there is a third guarantee — that life changes. Nothing stays the same. So, once you’ve completed your estate plan, you’ll want to review it every so often to address life’s changes. What could a review with your estate planner do for you?

First, reviewing your plan will force you to locate it. Often, after we prepare an estate plan, we put it in a very safe place. And, sometimes, we forget where that very safe place is. Take your plan out every once in a while, dust it off, review it and remind key people of its location.

Second, a review can ensure that you’ve properly funded your trusts. Check your beneficiary designations for life insurance and retirement accounts, and make sure that other assets are properly titled in the trust. This not only helps you avoid probate, it also ensures that the correct beneficiaries receive the distributions. All too often, we find that life insurance or retirement accounts do not have beneficiaries listed, or that the beneficiary was not changed due to life changes. For example, a client’s wife recently passed away. Prior to her getting married, she had named her mother as beneficiary of a life insurance policy. She had every intention for the proceeds to go to her husband and their child. However, she did not change the beneficiary to note this change.

Third, because relationships are fragile and change, reviewing your estate plan allows you to examine your relationship with the people you’ve named as guardian, agent under powers of attorney and trustee. Make sure that they are still the one’s that you want to make decisions for you during any period of incapacity or to follow out your instructions upon your death.

Fourth, you can see how your beneficiaries are doing. For example, you can explore questions such as:

  • Are my children now adults and not in need of guardianship?
  • How are my young adult children doing? Do they need more time to mature before they handle a significant amount of money?
  • Have some of my beneficiaries gotten into trouble with drugs, the law or misspending of money?
  • Have marriages, new births, divorce, death or other circumstances changed relationships?

These questions can help you determine whether you want to change the time and manner of distributions.

Fifth, you can meet with a lawyer to get an update on any law changes, tax or otherwise. It’s an opportunity to discuss any changes in the community standards and policies as they relate to estate planning. For example, during the past couple of years, many financial institutions have established policies where they will not accept powers of attorney older than 2 or 3 years old. A couple of financial institutions have established policies that they simply will not accept powers of attorney.

So much like with your physician, dentist, automobile mechanic and financial advisor, you will want to get an estate planning check-up and tune-up every now and then.