Estate Planning as a Process 2.0

We often refer to estate planning as a process, which confuses some people because they think that an estate plan is just a set of documents. The difference between those two philosophies is important because it gets to the core of how planning should work. When many people think of a plan they think about creating a set of instructions for dealing with a situation, with estate planning that means a set of instructions for addressing incapacity and death. The problem with this mindset, at least with respect to estate planning, is it does not address the changes that begin occurring in a person’s life immediately after signing their plan documents. While for some people those changes may be subtle and have little impact on their estate plan, for others it is important to make changes in the plan to address the changes in their lives. This is why estate planning needs to be an ongoing process.

For younger clients changes in employment, location, and relationship status are frequent motivations to update planning. Making sure clients properly fund new assets to Living Trusts is part of the regular review process. Assets to be funded can include everything from investment accounts to real estate, and consideration of beneficiary designations for IRAs, 401(k) accounts and life insurance policies is important. Events such as marriages and births of children require updates in planning to include these new important people as beneficiaries and designees.

As clients get older, the need for updates continues. A client's original designees for assisting in administrating estate planning documents also age and children become more mature. Many clients choose to update their planning to ensure their children are the primary decision makers. If children fail to mature as expected or encounter other problems, changes to distribution provisions allow the estate plan to evolve to protect those children in the event they need additional guidance.

As clients reach retirement, and beyond, regular review of a plan continues to be important to address the changes life brings. From periodically reviewing funding to ensure that all of the assets accumulated throughout life are titled correctly to ensuring that designees have the authority to address the unique challenges that come with aging, estate plan review can catch issues that become more pressing as a client gets older.

As you can see, no matter what stage of life a client may be in presently there are many changes that should cause them to update their planning. If an estate plan is just a set of documents they sign and put in a filing cabinet, those updates may not occur and cause problems in the event of an emergency. When estate planning is a process, where an experienced attorney works with you to review life events and update your plan accordingly, that plan becomes stronger with each review. Even if a review results in no immediate changes, open communication allows the attorney client relationship to grow and makes it easier on all involved to discuss some of the more challenging aspects of estate planning.

With the holiday season approaching and the end of the year on the horizon, now is a good time to take a few minutes to review current planning and reach out to trusted advisors to discuss the need for updates. For those without a current estate plan, it is also a great time to put a plan in place for the first time. No need to wait for a New Year’s Resolution, start the process now.

Matt and Al