Estate Plan Review: 9 Critical Items to Include

You’ve finally decided to sit down and review your estate planning documents. If you’re not going over them with your estate planning attorney or financial advisor, then you might be a little overwhelmed.

This article will cover 9 items you should include in your estate plan review, and the 5 times you should review your estate planning documents.

Estate plan review item #1: Power of attorney

Why is power of attorney at the top of the list of estate documents? Simply because you’re more likely to think about it in a non-estate planning setting.

And let’s face it–if you screw up in designating your powers of attorney, this is the part of your estate plan that you’re most likely to be around to regret making a bad decision on.

For example, if you give the wrong person a general power of attorney and they wipe you out, then you’ll still be around to regret the decision while getting your financial affairs back in order.

Durable power of attorney?

You should probably consider having a durable power of attorney in the event of your incapacity. You may want to pay attention to the state laws where you live. In some states, a power of attorney terminates upon incapacity unless it is specified as a durable power of attorney.

In other words, having a power of attorney to make decisions in case you’re unconscious may not work when you need it. So if you’re not sure, you should probably get legal advice from an estate attorney in your area.

Minor children

Do you have minor children? Plan on going on vacation and leaving them with the grandparents? You might want to make sure this document is up to date.

A power of attorney for a minor child allows the trusted person to attend to your child’s medical needs in case of emergency, if you’re not around. Usually, these powers of attorney are temporary in nature, so make sure to renew it when you’re going back on vacation or traveling for work.

General vs limited power of attorney

It’s a good idea to know the difference. A general power of attorney gives broad decision making authority to the named person. In contrast, a limited power of attorney usually has specific provisions or limited decisions.

In the military, horror stories abound about the newlywed soldier or sailor who gives his new bride a general power of attorney right before deployment, just to return and find out that she:

• Maxed out his credit
• Took as much money out of his accounts as she could
• Left him completely destitute with no recourse

As a general rule, you should be very cautious when weighing your options about granting decision-making authority to someone else.

Estate plan review item #2: Health care proxy

This delegates power of attorney privileges to someone specifically for medical decisions. Depending on which state you live in, this might be referred to as:

• Health care power of attorney
• Medical power of attorney
• Health care surrogate
• Patient advocate

Whatever the authority is in your state, you should make sure you have several people named in this document, so you can receive medical care in the event your primary power of attorney is not available. You should also check with your health care provider(s) to make sure they have the most recent copy on file.

Include HIPAA release from your medical provider

Many health care providers include their own HIPAA (Health Insurance Portability and Accountability Act) release paperwork in all those forms that you fill out at the doctor’s office. You should take some time to understand how your medical provider works, and make sure you:

• Understand whether your medical provider will respect your healthcare power of attorney, even if it’s different from what you’ve noted on your HIPAA release form
• Ensure that each of your health care providers has updated information. If you routinely see a specialist, you should make sure that doctor has the same information
• Separately document your preferred list of providers, to include emergency room data for the closest ER in your area.

Estate plan review item #3: Living will

A living will, sometimes known as an advanced medical directive, typically documents your wishes about end of life decisions, such as maintaining life support.

Because different states have different laws regarding health care, it’s important that you understand:

• What is covered under health care proxy in your state, and what is covered by a living will.
• What conditions must exist for a living will to be effective

For example, in Florida, the default, or suggested language for a living will (but not mandated) consists of:

Declaration made this   day of  ,   (year)  , I,   , willfully and voluntarily make known my desire that my dying not be artificially prolonged under the circumstances set forth below, and I do hereby declare that, if at any time I am incapacitated and:

•   (initial)   I have a terminal condition
• or (initial) I have an end-stage condition
• or (initial) I am in a persistent vegetative state

In other words, a living will would only be in effect IF:

• The person is incapacitated
• Has one of the three qualifying positions (as initialed), AND
• Two physicians, including the primary physician, have determined that there is no reasonable expectation of a medical recovery.

Be sure that you take the time to understand how this might work in your state.

Estate plan review item #4: Last will and testament

Your will is one of the most important legal documents, particularly if you have a lot of probate assets, like real property, a family business, or personal items. Not only should you review your will to ensure you know where everything will go, but you should make sure your assigned executor is up for the job.

Here are some other things you should keep an eye out for:

• Your stated beneficiaries haven’t changed, or you’ve accounted for new beneficiaries
• You’ve accounted for all family members
• You’re taking into account any special provisions or special needs

Your life circumstances probably won’t warrant frequent changes, but you do want to make sure you account for them when you do your estate plan update.

Estate plan review item #5: Beneficiary designations

Beneficiary designations help your financial assets avoid bypass the probate process. This can be beneficial for family members who need to access money to continue paying bills or to cover unexpected expenses.

Examples of financial accounts where you can assign beneficiary designations include:

• Life insurance policies
• Workplace retirement plans
• Individual retirement accounts (IRAs) or Roth IRAs
• Brokerage accounts
• Bank accounts

Here are some things you might want to take note of in your beneficiary designations to minimize mistakes:

Make sure that adding new beneficiaries does not delete your existing ones by accident.

Sometimes, when you add a new beneficiary, such as a new spouse or child, the financial institution treats the new form as the only reference for your beneficiary designation. So if you did not add the current beneficiaries because you assumed they would remain on the account, you might actually be writing them out as a beneficiary.

Just double check the paperwork. And it never hurts to re-add your existing beneficiaries, just in case.

If your marital status changes, check to make sure you know what your former spouse is entitled to.

It’s easy to say, “Just change your designations.” But if your divorce decree mandates certain things, like keeping your ex-spouse as a beneficiary on your existing life insurance policy, then you have to respect that.

So review your beneficiary designations against your divorce decree to ensure you’re honoring it. Then adjust your other accounts accordingly.

Make sure you’re consistent across ALL your accounts.

Many people make piecemeal adjustments to their estate plan, especially their beneficiary designations. If you make a significant change in one area, you may need to make substantial changes elsewhere.

For example, if you’ve previously written an adult child out of your will, but want to add them back in, then you should make sure you’re paying attention to what they will be entitled to.

Sometimes, people add a new beneficiary to their will, but not their beneficiary designations. And if a significant amount of their net worth passes by beneficiary designation, they might inadvertently leave their new beneficiary high and dry.

Primary AND contingent beneficiaries are important.

Not only is it important to have beneficiary designations for ALL of your accounts, but it’s important to have contingent beneficiaries (sometimes known as secondary beneficiaries).

Just as importantly is knowing whether you’d like to establish your designations as either ‘per stirpes’ or ‘per capita.’

Estate plan review item #6: Asset checklist

Even if your estate planning documents and beneficiary designations are up to date, it can be frustrating for family members and loved ones if no one knows what assets you have.

A comprehensive estate plan should include a checklist of major assets that you would want your surviving spouse or personal representative to know about when handling your estate. This checklist should include:

Physical assets

This should include any assets that might not otherwise be transferred by your state’s titling laws, particularly assets no one else could reasonably be expected to know about. You could include:

• Real estate
• Personal property, like cars
• Sentimental items, such as art, jewelry, or collectibles

Included in this list should be a list of alternate locations, including storage lockers, workplace, safety deposit boxes, etc.

Note: If you have a safety deposit box, do not store any important original documents in it. In many instances, banks will restrict access to a safety deposit box in case of death. If important documents, such as the original estate planning documents, or life insurance policies, are in the box, it might take a long time to obtain access.

Establish a list of financial accounts

You might know where all your money and investments are. But that doesn’t mean that everyone else does.

So you should have a list of financial accounts, to include:

• Account numbers & registration information
• Website and log-in credentials
• Phone numbers for someone to contact in the event of your death.

Consider digital assets

Digital assets might be the fastest developing part of estate planning law. So when you conduct your review, you should ask your estate attorney about things like:

• Social media accounts
• Cryptocurrency
• NFTs

Everything you can document about your assets and your intentions will help your loved ones get through the mourning process a little more easily.

Estate plan review item #7: Named parties in your estate planning documents

When’s the last time you looked at who is going to take care of all this stuff for you? As major life changes occur, the executor you assigned in writing 10 years ago may not be capable of carrying your current wishes.

When you update your documents, you should:

• Talk with each named person who has a significant role.
• Verify that person is able (and willing) to take on the requested responsibility, if needed

Estate plan review item #8: Funeral arrangements

Funeral arrangements are very rarely discussed, and even less frequently documented. Even if you simply state your current wishes, that will go a long way towards making things easier for your family.

You may consider taking the time to document:

• Whether you’d like to be buried or cremated
• Special arrangements, like location of scattered ashes or burial location
• Preferred funeral home, church or minister

Many well-intentioned families quarrel over what they think their deceased relative would have wanted. Why not make it easier for everyone and write it down?

Estate plan review item #9: Trust

Do you need a trust? Do you have a trust but no assets in the trust? This is always a complicated issue.

If you have a trust:

What assets are titled to the trust? A trust only has authority over trust assets. In other words, if you took the time to create a revocable living trust, then you should be diligent in ensuring that you’ve titled the appropriate assets or financial accounts to the name of the trust.

Or in the case of retirement accounts, you might consider whether you want to designate the trust as a beneficiary.

Who has copies of the trust documents? At the very least, your successor trustee and beneficiaries should have copies of the trust documents. If not, then the new trustee should have the contact information of the estate planning office that drafted them, if needed.

If you do not have a trust:

Do you need a trust?

Many people decide that they do not need a trust for a variety of common reasons, including:

• Upfront cost
• Hassle of titling assets to the trust
• They think their situation isn’t worth it

And many people actually don’t need a trust. But here are some situations where you may decide that a trust is worth considering:

• You don’t trust one of your heirs to make sound financial decisions with a sudden inheritance
• Special needs cases
• Peace of mind

Talk to an estate attorney about the pros and cons of having a trust

If you have any situation where a trust might be a viable option, you should talk about it with an estate planning attorney. An experienced law office can help you decide when (or if) a trust is warranted.

Let’s take a look at the times you need to review your estate plan.

5 times when you should review your estate plan

Your estate planning documents, when updated, are only good for as long as there are no major changes, either in your life situation or in the estate laws in your state. Here are 5 life events that should signal when it’s a good time for a review.

Any time you move to a different state

Even if you just updated your estate documents, you should have them reviewed by an experienced estate attorney in the new state you’re moving to. A brief review of your estate plan and your documents should be sufficient to ensure that your documents are consistent with state law.

Any time you add a new family member

Does this impact your beneficiary designations? Do you need to establish guardianship documents? You should have a review done if:

• You’re getting married (or if you’re getting divorced, for that matter)
• You’re having another child

When a named party dies

This would include:

• Executor or personal representative
• Successor trustee
• Beneficiary (either contingent beneficiary or primary beneficiary)
• Someone you share joint title with

When there’s a diagnosis

You go to the doctor’s office for a routine check up that turns out not to be routine. You might not want to go through your estate planning review after you’ve gotten a diagnosis.

But while you hope for the best, you want to be prepared for the worst. And that includes making sure your documents are squared away.

Every 5 years

Nothing significant happening? You should still have them updated by an estate planning attorney every 5 years to ensure that no major state law changes have impacted your documents.

Many financial advisors do an annual review of estate planning documents, just to ensure that:

• Beneficiary designations are up to date
• Their version of the documents are the most recent

Conclusion

Establishing your estate plan shouldn’t be that difficult. But maintenance is just as important as creating the documents in the first place. And with a checklist of what to look for, there should be no reason for you to not keep your estate plan up to date.

If you enjoyed this article and would like to read more about estate planning topics, please check out our estate planning archives!