Estate planning—also referred to as personal legal planning—is essential for peace of mind and protecting both yourself and your loved ones. Remember: legal planning documents help protect not only the people you love but also you, yourself, should you be incapacitated. Your life and well-being are at stake here, too—which people often forget.
At Blair Hall Advisors, we recognize that the legal planning process can be intimidating. While we're not attorneys, we've gathered valuable insights to make the process more accessible and empowering. Our aim is to help you take control of your future by sharing our top tips for a smoother estate planning experience.
1. Regular Reviews Are Essential
The most common mistake people make is creating legal planning documents and then forgetting about them, oftentimes forever. It’s ever so tempting to do this.
To prevent unintended consequences, it's crucial to review your will, trusts (if you have any), durable power of attorney, and healthcare power of attorney every three to five years or when significant life events occur, such as marriages, divorces, births, deaths, or substantial financial or health changes. Regular reviews ensure your documents align with your current intentions, preventing confusion among your loved ones in the event of your incapacity or passing. Reviews also assure that the various roles that are called for in the documents, such as a financial agent or a healthcare proxy, are assigned to the right people on your behalf and keep your documents in compliance with any changes in the law.
Make sure you attend to a durable power of attorney and a healthcare power of attorney in addition to your will. These allow a friend or family member to run your personal affairs or make healthcare decisions for you, respectively, if you are disabled and cannot decide for yourself. Also, even if you can still decide, these documents can allow others to assist you in carrying out your wishes to lessen the burdens on you later in life.
2. Maintain a Comprehensive Inventory of Your Assets and Insurance, Including Digital Assets
In today's digital age, we accumulate numerous digital assets, including email accounts, social media profiles, and online financial accounts. These assets require attention in your legal planning. You can include provisions in your will or trust to address how they should be handled. Additionally, consider using a digital asset manager or password manager, such as 1Password, LastPass, or NordPass, to securely store access instructions for online accounts.
It may be difficult for an agent acting on your behalf to access these accounts, but it’s even more problematic if your agent or executor is not even aware that they exist. In this era of online-only statements for many accounts, it’s imperative to document assets you may have that are accessed online only—and that documentation needs to be shared, typically using software, so that your agent or executor can readily access them. Make sure you use a password manager or digital vault that allows you to type notes in it that are shared with key people. One option is to make an e-folder using a password manager and share it with all your key people.
While you are at it, include an inventory also of your non-digital assets the same way as well, so that people have comprehensive information available through the same digital repository along with the digital assets. Often the name of the financial institutions, your account numbers, the exact titles of accounts, and the address of record are all that you need to save (check with your attorney).
Make sure your SSN and DOB are also known to people in your key roles, as well as the location of important original documents such as will and trusts.
3. Stay Current with Beneficiary Designations
Designating beneficiaries for financial accounts, life insurance, and retirement plans is common practice. However, these designations can become outdated. After significant life changes like marriage, divorce, or the birth of children, review your beneficiary designations to ensure they accurately reflect your current wishes.
4. Designate Backup People for Every Key Role
In today’s hectic world, it’s not hard to imagine that the primary named person for each role in your planning documents could be unavailable when needed. For example, if your first choice is your spouse, perhaps they would be pre-occupied with worry or grief if something has happened to you. Or, if your first choice is a non-spouse family member or friend, they might be traveling or unexpectedly coping with their own illness. Hence, it’s important to have a backup person for every role.
As with the primary people, it’s also important to make sure that your backup individuals are willing and capable. Have an open conversation with the people whom you would like for the roles about this. Also, even for people who verbally agree, see if they will click on a few links from your password manager or digital vault to get familiar with your notes on your affairs. If they will not take the time to get familiar, unfortunately that means your plans to rely on that person may need to change.
Also, be careful about giving authority to multiple people together. Discuss those closely with your attorney to be sure the complexity can be manageable. For example, people sharing a role from two different cities can make it harder to interact with financial institutions if an in-person visit is needed to an office.
5. Maintain Digital Copies and Secure Storage for Your Documents
Creating digital backups of your legal documents is essential for accessibility and security. Consider using secure cloud storage services or the features available in some password managers for maintaining notes with attachments. Share access instructions with trusted individuals to ensure these documents are readily available during emergencies. Make sure your trusted individuals test their instructions every year or so. Keep in mind, creating digital copies does not alleviate the need to keep the signed original copies in a secure and known location.
6. Create and Share a List of Key Contacts, including Professionals
Maintain a readily available phone list of the key people in your life—all of whom may not know each other. Make sure everyone has access by using cloud software and sharing a view-link. Include the financial professionals who are knowledgeable about your assets and insurance policies. This list ensures that your trusted family, friends, and advisors can be easily reached so that they can coordinate with each other as needed. Revisit the list annually.
7. Plan for Your Children or Other Dependents
Maybe it goes without saying, but it’s vital to plan for your children—especially your minor children—and anyone else financially dependent on you. This can also mean making sure you have enough life and disability insurance and are on track for accumulating enough assets.
One concern here is that both parents—married to each other or not—need to coordinate their indications for custody of minor children. The wills of two parents need to coordinate with each other. Attorneys are often strong in helping clients navigate this critical topic area.
Give yourself permission to look beyond immediate family for backup guardians for children. For example, do you have a pair of good friends whose family has a more similar family culture to yours than your immediate family? If so, they may be a better choice for emergency guardians.
Also remember that your pets are depending on you, too, and need to be planned for.
8. Plan for Your Businesses
Businesses, though often less beloved than pets and family, are also a planning challenge. We have seen documents that did not even mention a person’s business or any type of succession planning. Such gaping holes can cause a major challenge for people helping with your affairs, as it could create a need to go through the delay of getting the attention of the court system to have a business added to your documents only after the fact. In the interim, the smooth operations of your business could be impeded, and a business might even potentially fail.
If your business’ value is important to you to maintain through disability or in death, it should receive considered, detailed planning of its own.
9. Consider When Younger Adults May be Ready to Control Funds
Think carefully about the age at which you would like to see young people, such as perhaps your own children or grandchildren, control funds. It can be tempting to think of young people as adults when they are legally adults. But how mature are they really? One of the authors doubts that his children are mature enough to control an inheritance until about age 30; the other author thinks perhaps a bit younger is okay.
10. Read Everything, Make Sure You Understand It
You might not be your attorney’s very favorite client if you make sure you read and understand everything, but most of your legal documents ought to be in plain business English. Whatever is not in straightforward business English, your attorney should be willing to explain.
These are your documents. What they say is important. Reading and understanding them to the word is your assurance that they express your wishes. You deserve it.
In Closing…
As always, we look forward to hearing from any of you—whether about this article or anything financial on your mind. Blair Hall Advisors is selectively open to new client relationships. Please reach out to contact us to open a conversation.
Note: Copyright, Blair Hall Advisors, LLC. No reproduction or distribution in whole or in part is allowed without our written permission.