If you are an adult of any age, and have armed your loved ones with a will, trust, health care proxy and power of attorney, yeah for you! Whether your assets are modest or many, what a relief to all that in the event of a sudden capacity decline, or death, there won’t be mysteries and conflicts added to the stress and grief of painful days. Just one more thing: you’ve got to update your plans every couple of years. Here are pointers to make it easier for you – and those around you.
Set It and Forget It?
No, that’s not how estate plans work. Assets change. Families change, through births, marriages, divorces and more. Health changes. Even if you have been in a stable chapter of your life, it could be that those you named to carry out your plans, like executors, trustees, and guardians have had big changes in their lives, making it impossible for them to honor their fiduciary commitments. As attorney Steven Kriz of Levenfeld Pearlstein points out: “Estate planning documents are not museum pieces to be preserved unchanged; they are living instruments that must evolve alongside your life, your family, and the ever-changing legal landscape….The fundamental reason for regular estate plan updates lies in the dynamic nature of both personal circumstances and external factors…” Kriz encourages awareness of how life events impact estate plans, and offers these examples:
- Marriage fundamentally alters your family structure and may require complete restructuring of your plan, particularly in blended family situations….
- The birth of children and grandchildren necessitates updates to beneficiary designations, guardianship provisions, and distribution schedules.
- Changes in health status, whether your own or that of key beneficiaries, may require modifications to disability planning provisions, long-term care strategies, or the selection of successor trustees and agents.
- Divorce or death of beneficiaries or fiduciaries obviously warrant immediate attention to your estate documents.
- Geographic relocations also present unique challenges, as moving to a different state may subject your estate to new laws governing everything from community property rights to trust administration.
- Business ownership changes…often require corresponding adjustments to estate plans that previously relied on business interests for liquidity or specific tax planning strategies.
- Significant changes in the composition or value of your assets may render existing distribution schemes inappropriate or inequitable among beneficiaries.
Even absent major life changes, it’s best to revisit estate plans every few years. As you do, you may be surprised to realize that in fact, your hopes and intentions have shifted, laws have changed, or something you have not previously given much thought to would benefit from further attention. When reviewing your estate plan, Kris advises tuning into both “administrative and substantive modifications,” and shares these tips:
- Beneficiary designations across all accounts and policies must be reviewed and updated to reflect current intentions.
- Tax planning provisions should be evaluated against current law to ensure optimal efficiency and compliance.
- Fiduciary selections also require ongoing assessment, as the individuals you chose as trustees, executors, and agents years ago may no longer be the best choices due to changes in their circumstances, capabilities, or your relationship with them.
- Distribution provisions merit particular attention, especially as beneficiaries mature and demonstrate varying levels of financial responsibility.
- Powers of attorney and healthcare directives should be reviewed to ensure they reflect current preferences and comply with evolving state requirements.
- Guardian selections for minor children must be revisited regularly, as the relatives who seemed ideal when your children were young may no longer be appropriate as circumstances change.
Good To Know: Fiduciaries and Bonds Explained
Whether creating or updating a will and trust, pay close attention to the designation of loved ones, friends or professionals who you name to serve as your fiduciaries: they become responsible for the successful administration of your estate plan. The fiduciary for a will is typically referred to as an executor, whereas the fiduciary associated with a trust is referred to as a trustee. Regardless of the specifics of your estate plan, the fiduciaries you appoint have a legal obligation to carry out your affairs, in accordance with the intentions set forth in your official documents and the law.
Fiduciary bonds, alternatively referred to as estate, executor, or trustee, bonds, can be required as a safeguard for the interests of your estate and beneficiaries. Essentially, fiduciary bonds serve as a guarantee that your designees will adhere to your plans. As a leading national provider of fiduciary bonds, Colonial Surety Company makes it easy to obtain all types of estate and fiduciary bonds: simply get a quote online, fill out the information, enter a payment method, and download the bond.
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Estate Law Practice?
In addition to providing fiduciary and court bonds directly to the general public, Colonial Surety Company offers The Partnership Account® for Attorneys. This free business service provides user-friendly client management dashboards, enabling attorneys to easily obtain, coordinate, and e-file the court and fiduciary bonds clients need. See for yourself today:
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