Critical Steps After Signing Your Estate Plan

Estate planning is a process which begins, not ends, with the signing of your estate planning documents. Once your estate plan is signed, you need to take four additional steps to insure its success: funding your plan, safeguarding documents, speaking with family and conducting periodic reviews.

Estate Plan Step 1 | Funding

Business man reviewing an estate documentat desk The first, and most critical, step in this process is funding your estate plan. “Funding” takes a variety of forms depending on the documents your attorney prepared and your general situation. It includes such tasks as titling assets in the name of a trust and adding beneficiaries to accounts or reviewing existing beneficiaries. Unless you complete the funding process, your newly signed estate plan will not function as you intended and maintain control in case of incapacity.

Funding an estate plan also includes accounts and policies which have designated beneficiaries, including retirement accounts and insurance policies. Frequently, people do not review the beneficiaries of insurance policies and retirement accounts after opening them. A major part of the funding process is reviewing and updating (if necessary) the beneficiaries on your life insurance, annuities and retirement accounts, since these types of policies and accounts likely represent a substantial part of your assets and are generally not titled in the name of your trust. Estate plans can fail when the distributions in the legal documents and other accounts are not coordinated and up to date.

Estate Plan Step 2 | Periodic Review of Estate Plan

pen and calendar representing how estate plan can be reviewed and changed. Estate planning is not a static “one and done” process. It requires review, maintenance and often updating for life events and changing circumstances.

By conducting a review of your estate plan every 12 to 18 months, you can:

  1. Confirm documents are properly signed, witnessed, notarized and recorded (as necessary).
  2. Determine if any replacement documents are needed because of a life event or change in family circumstances, needs or goals.
  3. Review and update your estate plan funding, especially for assets or accounts acquired after plan was signed or previous periodic review.
  4. Review insurance policy, annuity and retirement account beneficiaries
  5. Update list of assets and accounts (physical and digital)
  6. Review income needs and adjust financial plan accordingly
  7. Update list of location of important documents and listing of usernames, passwords and security questions for online accounts.
  8. Discuss any changes to plan or assets with family.

Estate Plan Step 3 | Speaking With Family

Father and son having a discussion, showing how important it is to communicate
                with family about your estate plan wishes.

Speaking with your family about your estate planning choices is another critical part of the planning process. Plans often fail when family / survivors don’t know about them or understand them. Most families find conversations about parents’ death or illness to be very difficult. As a result, these important conversations often don’t happen, with negative consequences. Generally, parents don’t talk to their children about their finances and potential inheritance for four reasons: they don’t want to confront dying or becoming incapacitated, they are uncomfortable disclosing financial matters to their children, they are concerned that children’s knowledge of the size of their inheritance will reduce motivation and they are concerned with children’s financial skills.

However, holding these conversations has a number of benefits:

  1. Children are aware of your planning, goals and wishes regarding the distribution of your estate
  2. Your family has a sense of empowerment over process since you provided a track for them to follow
  3. Provides an opportunity for passing on family values
  4. Gives survivors an understanding of your plans for your estate
  5. Assists family with developing common understanding and philosophy about your legacy
  6. Prevents (or at least reduces) sibling strife by explaining your choices and distribution decisions.
  7. Provides family with opportunity to consider how they will handle the distribution and disposal of your physical assets before a crisis comes

Another important reason to speak with your family about your plan and wishes is that you likely designated one or more of your children or other family members to act as your power of attorney, personal representative and / or successor trustee. They need to be aware of that designation and what will be expected of them. You also need to take the time to explain to them why you want your affairs handled the way you outlined in your plan.

It is also important to speak with your family about your asset distribution choices, especially if your children will be receiving unequal amounts. If you are able to explain your reasoning, you may reduce or eliminate family discord after your passing. An inheritance can also be a life-changing event, so advance warning will provide time for the recipient to be emotionally and financially prepared.

Some other issues to discuss with your family include:

  1. Who you want to be contacted following your passing
  2. Any specific wishes regarding your final arrangements.
  3. Any instructions regarding the distribution of specific objects (jewelry, tools, art, and collectibles) that should go to specific people. (Your estate planning binder includes a section to record these instructions.)

Finally, you and your family can develop a plan of how they will pay your routine bills (utilities, insurance, mortgage, car payments, and so forth) if your become incapacitated and in the early months after your passing.

Estate Plan Step 4 | Safekeeping of Estate Planning and Other Important Documents

Safe combination lock showing the imprtance of safeguarding your estate documents.

The signed originals of your estate planning documents need to be safeguarded. You should keep the binder with the signed originals of your estate planning documents at a secure location (from fire, flood or theft, for example) in your home. Placing your estate planning documents in a safety deposit box is not recommended given that doing so complicates accessing the documents in an emergency. It is also important to inform your designated power of attorney, personal representative and successor trustee (if applicable) of the exact location of the original documents. These fiduciaries will need the original documents in the event of your incapacity or death. Difficulties and delays will result if your family cannot locate the originals.

If a financial institution or medical provider asks to see one or more of your estate planning documents, you should provide them with copies and not the originals. If you do provide the originals to anyone for copying, always be 100% sure to get the original back and return it to the appropriate tab in your estate plan binder. Keeping your documents organized and accessible is an important part of a successful estate plan.

It is also recommended that you provide copies of the signed documents to your designated power of attorney, personal representative and successor trustee (if applicable), so they can review them in advance and ask you any necessary questions. You should make several copies of your health care power of attorney. In addition to providing one to your designated agent and physician, you should always take a copy with you on vacation. As a backup plan, take a clear photograph of your health care power of attorney with your cell phone so that you always have a copy with you.

In addition to your original estate planning documents, your family / successors will need to know the location of any life insurance policies, annuities, bank statements, deeds, vehicle titles and retirement account information. Additionally, you should prepare a list of advisor names with contact information and online accounts. (Click here for more information on providing guidelines to your successors / executor / power of attorney.)

If you are like many people, you likely have a substantial online presence, including financial accounts, online bill payments, online shopping and social media. You will need to prepare a list of the appropriate URLs, account numbers, user names, passwords and security questions for each account. You should also leave instructions regarding how you want each of your online accounts handled after your death. Always check the user’s agreement of any online provider to determine if you can provide your user name and password to another person. Many online providers have express instructions regarding accessing a deceased person’s account. Some states have statutes which provide personal representatives with the authority to access online accounts.

Want to learn more about critical steps after signing your estate plan and why they’re important? Legacy Assurance Plan offers a FREE booklet that will help explain more about this important estate planning component.

Cover to the PDF, Critical Steps after Signing your Estate Plan.

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