The Importance of Reviewing and Updating Estate Planning Documents

Contributed by: Nick Defenthaler, CFP® Nick Defenthaler


Estate planning is typically not an area that most of us get excited about. Let’s be honest, it can be a tough thing to discuss and dig into. Proper estate planning, however, and sometimes more importantly simply staying on top of your plan and keeping your documents up to date, is an essential part of your overall financial game plan. Far too many of us don’t have any documents drafted, period. If we do, chances are they were prepared more than 10 years ago – and we all know how much life can change over the course of a decade! Here are a few things to consider when going through the process of updating your documents:

Reviewing Beneficiaries

One of the simplest things we can do to ensure assets are passed on to who we want, is to have the proper beneficiaries listed on all accounts. This may seem like a “no brainer” but I can’t tell you how many times we’ve discovered, after reviewing accounts with clients, that changes need to be made. Recently, we worked with a new client who was in the process of “end of life planning” for her mother who had recently become divorced. While reviewing accounts and the estate plan with the attorney, we discovered that mom’s ex-husband was still listed as the primary beneficiary on an IRA that totaled nearly $500,000.  Although her trust had been updated to have her assets pass to her children post-divorce, the beneficiary designations were not updated on one of her largest assets. Many people are shocked to find out that although a will or trust may stipulate one thing in regards to asset distribution, a beneficiary designation trumps those documents. Luckily, we were able to help the mother switch the beneficiary of her IRA to her children approximately one week before her passing. This highlights the need to take reviewing beneficiaries extremely seriously, which is why we do this annually with you during your review meeting.

Reviewing Trustees, Personal Representatives, and Powers of Attorney

Just like we tell clients in regards to their financial plan, the same goes for their estate plan – it’s not a “one and done” type of thing. Something this important requires a process and the need to review and stay on top of it as the years go by and as life changes. It can be an eye opener for clients when we share with them who they have listed as a trustee in their trust, a personal representative in their will, or as a power of attorney for medical or financial purposes. Many times, those listed are parents who are now deceased or are siblings that now live on the other side of the country. At the time the documents were drafted listing those individuals made perfect sense, but maybe now the client’s children are mature and responsible enough to be in charge of their parent’s estate and to be their decision maker if needed. Typically, we recommend reviewing your documents every 3 years and immediately after a life event such as a marriage, death of a spouse, divorce, birth of a child, etc. 

As you can see, staying on top of your estate plan is extremely important. It’s also vital to keep these documents well organized and ideally provide copies to your financial planner and have your attorney retain copies as well. We also stress to communicate your wishes and to have open conversations with those who you name to administer your estate. This will help to keep everyone on the same page and help to avoid potential conflict that could arise during a time frame that family should be coming together and not stressing over dollars and cents.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. You should discuss any legal matters with the appropriate professional.