How to Update Your Estate Planning To-Do List Annually

Estate planning is a fundamental part of securing your financial legacy and ensuring that your loved ones are taken care of when you're no longer around. However, estate planning is not a one-time task---it is an ongoing process that requires regular updates to reflect changes in your personal life, finances, and the legal landscape. By reviewing and updating your estate planning documents annually, you can ensure that your plan remains relevant and effective.

This article will walk you through the essential steps of updating your estate planning to-do list every year. From reviewing key documents like your will and trust to reassessing beneficiary designations and tax considerations, these tasks will help keep your estate plan aligned with your goals.

Review Your Will and Trust Documents

1.1 Assess Changes in Personal Circumstances

Your will and trust are the foundation of your estate plan, and it's crucial to ensure they reflect your current wishes. Life is constantly changing, and your estate planning documents should evolve accordingly.

• Marriage or Divorce: If you've recently gotten married, divorced, or remarried, your will and trust may need adjustments to reflect your new spouse, children from previous relationships, or changes in inheritance instructions.
• Birth of Children or Grandchildren: The arrival of new family members should prompt you to review your will and trust. You may need to add new beneficiaries or update guardianship designations if you have minor children.
• Death of a Beneficiary or Executor: If a named beneficiary or executor has passed away, you will need to designate a new person in their place to avoid complications in the probate process.

1.2 Review the Specifics of Your Will or Trust

While the overall structure of your estate plan may not require a complete overhaul, it's essential to assess the specific provisions:

• Changes in Asset Distribution: Ensure that your will or trust clearly outlines how your assets will be distributed. If you've acquired or sold significant assets (such as real estate or investments), your distribution instructions should be updated to reflect these changes.
• Beneficiaries: Double-check that the beneficiaries listed are still accurate. People's relationships with you change over time, so it's important to ensure that your will accurately represents your wishes.

1.3 Seek Professional Guidance

After making any substantial changes to your will or trust, consider consulting with an estate planning attorney to ensure that your documents comply with current laws and effectively carry out your intentions.

Revisit Your Powers of Attorney

2.1 Healthcare Power of Attorney

A healthcare power of attorney allows you to designate someone to make medical decisions on your behalf if you become incapacitated. You should review this document annually to ensure the person you have appointed is still capable and willing to make these decisions.

• Changes in Health: If your health has changed, you may want to appoint someone else who is better suited to make healthcare decisions for you in the event of an emergency.
• Change in Relationships: If you've had a falling out with the person you originally designated as your healthcare proxy, it's important to update the document accordingly.

2.2 Financial Power of Attorney

A financial power of attorney gives someone the authority to manage your financial affairs if you are unable to do so. Like the healthcare power of attorney, this document should be reviewed annually to ensure that your designated agent is still the right person for the role.

• Changes in Financial Situation: If you've experienced significant changes in your financial situation, such as inheriting money, starting a business, or facing a large medical expense, your financial agent should be someone you trust to manage those new complexities.
• Changes in Relationships: Again, if your relationship with your designated financial agent has changed, it's important to update the document to reflect your current wishes.

Reevaluate Your Beneficiary Designations

3.1 Update Life Insurance Beneficiaries

One of the most commonly overlooked areas in estate planning is beneficiary designations on life insurance policies. Ensure that your life insurance policy beneficiaries are up to date, especially after major life events like marriage, divorce, or the birth of children.

• Primary and Secondary Beneficiaries: Ensure both primary and secondary (contingent) beneficiaries are named to avoid confusion in case the primary beneficiary is unavailable.
• Divorce: If you've recently divorced, remember that your former spouse may still be listed as a beneficiary. Most insurance policies do not automatically remove ex-spouses as beneficiaries, so this is an important detail to revisit.

3.2 Revisit Retirement Account Beneficiaries

Similarly, your retirement accounts---such as 401(k)s, IRAs, and pensions---will require annual checks to ensure your beneficiaries are still in line with your wishes.

• Changes in Family: If you've had children or grandchildren, you may want to adjust the beneficiaries to include them. Alternatively, if a beneficiary has passed away, you may want to name a new one.
• Spousal Designations: If your spouse has passed away or you've remarried, your beneficiary designations may need to be adjusted to reflect the new family structure.

3.3 Review Other Accounts with Beneficiary Designations

Many financial accounts, such as bank accounts, brokerage accounts, and even certain real estate holdings, allow for a transfer-on-death (TOD) or payable-on-death (POD) beneficiary designation. Make sure all such accounts have the correct beneficiary information and that it aligns with your overall estate plan.

Update Your Digital Assets Plan

4.1 Inventory of Digital Assets

In today's digital age, it's more important than ever to create a plan for your digital assets, including social media accounts, email accounts, digital currencies, and online business assets.

• List of Accounts: Maintain an updated list of all your online accounts, including usernames, passwords, and security information. This list should be accessible to a trusted individual in case of your incapacitation or death.
• Digital Legacy: Decide how you want your digital assets to be managed. Some people choose to leave their social media accounts active, while others prefer to have them deactivated. Ensure that these wishes are clear in your estate planning documents.

4.2 Appoint a Digital Executor

Designate someone who will be responsible for managing your digital assets after your death. This person should have access to your digital accounts and understand how to carry out your wishes.

Review Your Trust's Tax Considerations

5.1 Review Trust Funding

If you have a living trust, it's essential to review the assets you've transferred into the trust and ensure that it is properly funded. Over the course of a year, you may have acquired new assets that should be included in the trust or sold assets that need to be removed.

• Reevaluate Trust Ownership: Confirm that all major assets, such as real estate, investment accounts, and valuable personal property, are properly titled in the name of the trust.
• Property Tax Implications: In some cases, transferring property into a trust can have tax consequences, so it's important to check that these transfers are aligned with current tax laws.

5.2 Tax Law Changes

Tax laws can change from year to year, and certain changes might impact how your trust is taxed or how assets are transferred to your beneficiaries. Consult with an estate planning attorney or tax advisor to ensure your trust is still structured in the most tax-efficient way.

Consider Charitable Giving and Planned Giving

6.1 Review Charitable Donations

If you plan to make charitable donations as part of your estate plan, review and update your charitable giving instructions on an annual basis. This can include updating your will to allocate funds to charities or establishing charitable trusts to support causes you care about.

• Charitable Bequests: Ensure that the bequests in your will to charitable organizations reflect your current preferences.
• Tax Benefits: Charitable giving can have tax advantages, so review these options with your estate planner to make sure you're taking full advantage of them.

Consider Long-Term Care and Medicaid Planning

7.1 Review Long-Term Care Coverage

Healthcare costs, especially long-term care, can be one of the largest financial burdens in retirement. If you have long-term care insurance, it's important to review your policy to ensure that it still aligns with your needs.

• Policy Changes: Verify that your policy terms haven't changed and that your coverage limits are still appropriate for your situation.
• Eligibility for Medicaid: If you don't have long-term care insurance and are relying on Medicaid in the future, review the eligibility requirements in your state. Medicaid laws can change, and you may need to adjust your estate plan to preserve your eligibility.

Ensure Your Funeral and Burial Plans Are in Place

8.1 Make Your Final Wishes Known

Although it may feel uncomfortable, making arrangements for your funeral and burial ahead of time can relieve your loved ones of the burden of making decisions during a difficult time.

• Funeral Plan: If you have specific wishes regarding your funeral, such as the type of ceremony, location, and who should be involved, document these details in your estate plan.
• Prepaid Funeral Plans: Some people choose to prepay for funeral services to ensure that their wishes are met and to alleviate the financial burden on their families.

Consult With an Estate Planning Professional

9.1 Review the Entire Plan with a Professional

Once you've updated your estate planning documents, it's important to have a professional review your plan to ensure that everything is in order. An estate planning attorney can help identify any potential issues or gaps that you might have missed and offer guidance on any new legal or financial considerations.

Communicate Your Plan to Your Family

10.1 Inform Your Loved Ones

Finally, once your estate plan is updated, it's important to communicate your wishes to your loved ones. Having an open conversation about your estate plan can help prevent misunderstandings or disputes down the road.

• Executor and Trustee: Make sure that the individuals you have chosen as your executor or trustee are aware of their roles and responsibilities.
• Family Discussion: While you don't need to share every detail of your plan, providing your family with a general overview can help them understand your intentions and avoid unnecessary confusion or conflict.

Estate planning is a dynamic process that should evolve alongside changes in your life. By reviewing your estate plan annually and making necessary adjustments, you can ensure that your wishes are carried out, your loved ones are taken care of, and your financial legacy is protected.

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