As the leaves begin to change and the holidays approach, many people start thinking about fall cleaning. It’s a good time to organize the garage, clean out closets, and get rid of things you no longer need.
But there’s another type of cleaning that often gets overlooked: cleaning up your estate plan.
Your estate plan may have been perfectly appropriate when you created it, but life, the law, and your family rarely stays the same. People get married, children grow up, relationships change, businesses evolve, and assets come and go. An estate plan that hasn’t been reviewed in years may no longer reflect your wishes, or may create unnecessary complications for the people you leave behind.
Fall is a great time to take a fresh look, AND October is National Estate Planning Month!
Here are seven things to check before the end of the year.
1. Review Your Beneficiary Designations
One of the easiest things to overlook is also one of the most important.
Retirement accounts, life insurance policies, investment accounts, and other financial assets often have beneficiary designations that determine who receive those assets when you die.
Those designations may not automatically change when your circumstances do.
For example, if you created a retirement account years ago and later got married, divorced, had children, or experienced the death of a named beneficiary, your account may still list someone you no longer intend to receive the asset.
Even if your will or trust says something different, beneficiary designations supercede what your will or trust says (except in very narrow circumstances).
Fall cleaning tip: Make a list of your major accounts and policies and confirm that the beneficiary information is current and consistent with your overall estate plan. If you are unsure what your beneficiary designations should say then we should talk.
2. Clean Out Your List of Decision-Makers
Your estate plan likely names people you trust to make decisions on your behalf.
These individuals may include the person serving as your:
- Executor (called a personal representative in Oregon and Washington)
- Trustee
- Financial agent
- Health Care Representative
- Guardian for minor children
But what happens if the person you named years ago is no longer the right choice?
Maybe your children are now adults and could take on responsibilities they couldn't before. Maybe the person you originally selected has moved away, become ill, passed away, or simply isn't someone you would choose today.
Your estate plan should reflect who you trust now, not who you trusted a decade ago.
Review the people you've named and consider whether each person is still willing and able to serve.
3. Update Your Asset Inventory
You don't have to own millions of dollars in assets to benefit from keeping an updated inventory.
Over time, you may have opened new bank accounts, purchased real estate, started a business, acquired investments, or inherited property.
You may also have sold assets that are still referenced in an older estate plan.
An outdated asset inventory can make it harder for your family to understand what you owned and how those assets were intended to be handled.
Consider creating or updating a list that includes:
- Real estate
- Bank and investment accounts
- Retirement accounts
- Life insurance
- Business interests
- Valuable personal property
- Digital assets and accounts
- Debts and other financial obligations
You don't necessarily need to include every account number or password in your estate planning documents. However, making sure your loved ones know where important information can be found can save them significant time and frustration later.
If you have a trust this can often be the most important, and the most overlooked step! Creating an inventory of your assets is half the battle. Double check that your assets are owned in the name of your trust or that your assets name your trust as the beneficiary (except retirement assets). In most cases the beneficiary designation supersedes the terms of the trust.
4. Revisit Your Digital Estate
Your estate isn't limited to what's sitting in your house or stored in a bank account.
Today, many people have a significant digital footprint that may include online financial accounts, photographs, social media accounts, cryptocurrency, websites, email accounts, and other digital property.
If your estate plan hasn't been reviewed in several years, digital assets may not have been fully considered.
Think about what exists online and what would happen to those accounts if you were no longer able to access them.
You may want to create a secure inventory of important digital assets and provide instructions for how you want certain accounts handled.
Don't forget: Digital assets can have both financial and sentimental value. Family photographs, personal writings, and other digital memories may be just as meaningful as physical belongings. Does your Power of Attorney address what to do with your digital assets? Have you successfully named your Legacy contacts on your social media accounts? Did your estate planner even address these issues?
Our world is digital. Your estate plan should be too.
5. Look for Changes in Your Family
Family changes are one of the biggest reasons to revisit an estate plan.
Since your plan was created, have you:
- Married or divorced?
- Welcomed a child or grandchild?
- Lost a spouse, child, beneficiary, or person named in your plan?
- Experienced a significant change in a family relationship?
- Had a child reach adulthood?
- Acquired a new home, or significant new assets?
Any of these events could affect your estate-planning decisions.
For families with minor children, guardianship provisions are especially important to review as children grow older. Your priorities may look very different when your children are teenagers than they did when they were toddlers.
Your estate plan should grow with your family.
6. Reconsider Your Business Succession Plan
If you own a business, estate planning and business succession planning often go hand in hand.
Ask yourself:
If something happened to me tomorrow, would my family and business partners know what to do? Does your business partner have the funds or opportunity to buy your spouse out? Would they be thrilled to accidentally be in business with your spouse?
You may need to revisit decisions about who will manage the business, who will inherit your ownership interest, whether the business should eventually be sold, and how ownership will transition.
This becomes especially important as you approach retirement or as children and other family members become involved in the business.
A successful business can take years or even decades to build. Businesses in Washington and Oregon must also consider how the value of the business increases estate taxes, but doesn’t provide additional liquidity to cover the estate tax bill. Does your estate have a plan for this? A succession plan can help protect what you've built and provide your family with a clearer path forward.
7. Make Sure Your Documents Still Match Your Goals
Finally, take a step back and look at your estate plan as a whole. Does it still accomplish what you want?
A will or trust may still be legally valid, but that doesn't necessarily mean it still reflects your current wishes.
Your financial circumstances may have changed. Your family may have changed. Your goals may have changed.
Perhaps you originally created your plan to provide for young children, but they're now adults. Maybe you started a business that didn't exist when you created your estate plan. Or perhaps you've accumulated assets that require a different approach.
Estate planning isn't a "set it and forget it" task. It should evolve with you.
A Little Estate-Planning Maintenance Can Go a Long Way
Fall cleaning isn't just about making your home feel more organized. It's also a reminder that occasionally taking stock of what you have, and what you no longer need, can make life easier. The same is true for your estate plan.
You don't need to wait for a major life event to review your plan. A periodic checkup can help identify outdated beneficiaries, decision-makers, assets, and instructions before they become problems.
And if you discover that something needs to change, it's better to address it now than leave your family to deal with it later.
This fall, while you're cleaning out the closets, take a few minutes to clean up your estate plan, too.
At Sunstone Planning, estate planning is about creating a plan that reflects your life, your family, and your goals, not simply checking a box on your to-do list. If it's been a while since you reviewed your estate plan, fall can be the perfect time to start the conversation.