The question should be WHEN do you need to update your estate planning documents, not IF. If you don't have estate planning documents in place yet, and you are over the age of 18, now is the time to get at least Durable Power of Attorney documents for both health care and financial decisions in place. These Durable Power of Attorney documents give someone else the ability to make decisions and take actions on your behalf during your lifetime if you are unable to do so for yourself. A simple Will is also appropriate for most individuals, even if you don't have significant assets or property.
When to Review Documents
If you already have documents in place, the common rule of thumb is to review your documents at least every 5 years. Changes in estate law or significant life changes may warrant a change in the meantime. Examples of these life changes are:
- Birth of your first child (update will to name guardian(s) in the event that both parents pass away before the child is an adult).
- Death of a spouse
- Second marriage
- Inability of one or both of your Durable Powers of Attorney, named executor, or Successor Trustee become unable to serve
- You desire changes to your plan (how you want assets distributed, to whom, by whom)
- You have a significant health change
It is important to note that if changes to your estate documents are made, there are steps you need to take to ensure that they can be followed at a later date, when/if needed:
- If you have a trust, make sure that appropriate assets are titled to the trust and that beneficiaries are updated on retirement accounts, life insurances, etc.
- Make sure that your financial advisor has updated copies of all documents.
- Most importantly, make sure that key family members/friends know that the documents exist and know where they are kept.
Keeping your legal affairs up-to-date, and making sure that your legal and financial plans are working in tandem, are vital to ensuring that your future desires are met. Work with your financial planner to discuss what documents and changes might be appropriate for you.
Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.
Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.
You should discuss any legal matters with the appropriate professional. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. C14-013670