Experts agree that most everyone needs an estate plan. Just getting an estate plan isn't enough; it is important to get a complete and thorough estate plan. By taking the time to ensure that your plan is complete with alternate, or backup, beneficiaries and fiduciaries, you can give your plan some “insurance” in the form of protection against something happening to the people you have named in your plan as primary beneficiaries and fiduciaries. This insurance can help you ensure that an unexpected event won't get in the way of accomplishing your goals and objectives.
If you look at Google's dictionary, under the word “insurance,” you'll find two definitions. The first is the one that probably that probably sprung immediately to your mind, which is a contractual agreement between an insurer and an insured in which the insurer promises to indemnify (which means to compensate for a loss or harm) the insured if any of certain set of covered events takes place.
The second definition is more general. It says “a thing providing protection against a possible eventuality.” This is the sort of thing that you might think of as “insurance” in the metaphorical sense. When a character in your favorite TV action-intrigue drama talks about an “insurance policy,” chances are he or she is talking about this second definition - something that, if an unfortunate or dangerous event occurs, will provide the bearer with a degree of protection against some type of risk of harm.
It is in this latter sense that your estate plan can benefit from some “insurance.” Everyone who makes an estate plan probably goes over the basics. Who do I want to be my beneficiaries? Who do I want to be the successor trustee of my living trust… or the executor of my will… or the attorneys-in-fact under my powers of attorney? These are all important and essential pieces of the estate planning puzzle and vital decisions you need to make.
However, if you stop there, your plan is still exposed to risk. If you name only one person as your attorney-in-fact under your power of attorney and that person is dead or incapacitated by the time you need an attorney-in-fact to act on your behalf, then that means that you have no one available and authorized to speak for you. This could potentially lead to expensive, time-consuming and stressful court proceedings to get a guardian or conservator appointed for you. Similarly, if you name only one person to be the executor of your estate and that person is unavailable (due to death, incapacity, unwillingness or some other reason) then your estate could be thrown into extra court hearings where a judge will decide who should oversee the distribution of your wealth. All of these sound like distinct risks of harm, don't they?
This is where careful and detailed planning comes in. If you have completed a detailed estate plan, then that plan will name, not only your beneficiaries, your executor, your attorney(s)-in-fact and your living trust's successor trustee, but also alternates to serve as back ups in each of those categories. These back ups are the “insurance” for your plan that protects your legacy and your planning goals. Perhaps you want your daughter to serve as your financial attorney-in-fact. However, if she were not available for any reason, you would also be satisfied with your son-in-law serving in that role. By going the extra mile and naming your daughter as your attorney-in-fact and your son-in-law as the alternate attorney-in-fact, then you've given yourself protection in the event that your primary designee is dead, incapacitated or unavailable. This “insurance” safeguards your goals and objectives from being thrown into a mess, into the courts or both, just due to something happening to the first person you named.