This is the check engine light on your estate plan. I’m going to give you ten quick and easy things everyone can check off on their estate plan.
Trusts avoid probate because they are funded with your assets, and yes, that includes your bank accounts. It is important that your successor trustee be able to instantly take on your responsibilities if you should become incapacitated or pass away. If you have assets outside the trust, that hinders their ability to carry out the job you’ve given them. If you’re wondering about adding your child to your bank account, read this first.
2. Real Estate
Have your purchased a new piece of property or refinanced? If you have, you may have a significant asset outside your trust and exposed to probate. Check your deed to see if it names you as trustees or if you’re holding title as something else - joint tenants for example. Talk to your estate panning attorney about any real property not in your trust.
3. Beneficiary Designations
Life insurance and retirement plans are controlled not by a will or trust, but by the beneficiary designations, typically using a form provided by the company. Most of the time these assets should not be placed in your trust, but there are exceptions for both life insurance and retirement plans. If you aren’t sure, check with your attorney.
4. Other Assets
In California it is typical to leave vehicles outside of the trust, but have a general assignment to the trust. Other assets such as business interests and individually held stock shares require specific steps to transfer into the trust.
5. Power of Attorney
Your financial decision maker should have a copy of the document. In addition, your banks should have a copy as well. Most financial institutions have a policy of rejecting Power of Attorney that are over 5 years old. If you just let your power of attorney sit in your trust binder, and 10 or 15 or 20 or more years later your agent dusts it off and brings it into a bank,
6. Health Care Directive
Just like the Power of Attorney should go to the bank, your Health Care Directive should go to your doctor. If there is an emergency, your family shouldn’t have to worry about finding your estate planning binder, digging out the Directive and bringing it to the emergency room. If you give it to them ahead of time, the hospital can just look in their records.
If you created your trust when you children were young, you probably named a trusted relative or friend as the trustee. Now that your children are grown, it is time to review whether that should be changed.
How you distribute your estate is unique to every family, and should be something that is reviewed regularly. Does your estate plan accurately reflect your current wishes of who gets what?
9. Financial Position
Some changes in financial situation can impact how your estate plan works. In some instances recent changes in federal estate tax law can allow estate planning attorneys to simplify your estate plan. If you’ve downsized and simplified, maybe your estate plan should be updated. By the same token, if your proverbial ship has come in, and your estate is significantly larger than it was when you created your estate plan originally, you should review your plan for the best tax and asset protection strategies.
10. Changes in Family Dynamics
Some plans are built around assumptions about how children will react, or particular assets that one or two children care about that the others don’t. You should review those assumptions regularly, and if they’ve changed, make sure your plan can either handle the change, or change your plan.
Your family is relying on having an effective estate plan to save them from legal headaches. Spend a few minutes each year to run through this quick checklist to make sure everything will work the way you want it to work.