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Will Your Heirs Receive the Estate You Intended? Thumbnail

Will Your Heirs Receive the Estate You Intended?

When we discuss estate plans during our client meetings, we often hear either: “It’s on my list and I will call next week to get it done.” Or, “this doesn’t apply to me…I have my will and trust sitting in my safe.”

If you haven’t thought about your will and trust over the last few years and made sure these documents were up-to-date, then please keep reading! That’s because lives and laws can change dramatically in just a few years and these changes can affect your estate.  

Successful estate plans often have these attributes:

  • Key participants are identified
  • They reflect your current situation
  • They are kept up-to-date legally
  • Capable people are asked to distribute or manage your assets.

Here are some tips for creating and maintaining a successful estate plan:

An estate plan includes documents that can be used while you are alive and after you have passed. 

When you are alive, your powers of attorney for both healthcare and finances can simplify the process of appointing someone that you trust to help make both financial and healthcare decisions for you should you become incapacitated.  Often the primary power of attorney is our spouse.  We highly recommend choosing one or two secondary decision makers as a backup to your spouse. This secondary person should ideally be one generation below you in age and living nearby. For the medical power of attorney, you will be best served by someone with some knowledge of medicine. It is often best if the person who is your financial power of attorney is not your primary caregiver as this prevents a loved one from taking advantage of their elderly parent’s financial situation. 

Good estate plans reflect your current situation.

Whether you create a will and trust (which many Californian’s need due to the high cost of probate) or simply designate beneficiaries to each individual asset, having a statement of your intentions (like a will or Trust) will enable your heirs to implement your wishes.

To quote GBB’s estate planning expert, Mark Huffman “estate planning is all about getting the right person, the right asset, at the right time.” What makes an estate plan complete?

  • It needs to include all property you currently own.
  • It should specifically name any person (or organization) which you would like to bequest assets to.
  • It should provide contingency plans for the assets if things change.

If that description seems basic, it is. Unfortunately, we have seen many circumstances where one of those three is missing (and/or wrong) and the ramifications can be very costly to family members and/or the estate. 

Estate Plan should be reviewed regularly.

We recently had a new client meeting and we found out that the beneficiary of the client’s 401(k) plan were his parents.  He had named them as beneficiaries which he began working at the age of 22!  If he had passed away, it would have been nearly impossible for his wife and children to override the beneficiary designation on file.  We believe its important to have your estate plan reviewed by a professional at least every few years. Why? Your plan is only as good as the information inside it—tax laws change, properties are bought and sold, people get married and divorced, and families grow and shrink.  It is best if your estate plan reflects these changes to make sure that those who you want to receive your wealth actually receive it.

Chose the right person as successor trustee/executor.

Finally, making sure that you choose the right successor or executor to implement your plan is key to executing your plan. Whomever you choose to act as your executor/trustee should have these attributes:

  • A familiarity with finances, so he or she can be trusted to act as a fiduciary to your estate.
  • Good communication skills.  It’s important to make sure that your trustee is a good communicator who can provide regular (quarterly) updates to beneficiaries. This communication piece is one we often hear causing the most family strife amongst adult siblings. When successor trustees don’t adequately communicate with beneficiaries, that can lead to further delays or long-term family division.
  • Time.  Managing and closing an estate involves many tasks which take time and effort.    

If you don’t feel you have someone in your life who can implement your wishes, you may be better served to pay an outside fiduciary to execute your wishes. There is a growing industry of private fiduciaries, whose job it is to execute an estate plan in its entirety and to do so with a fiduciary standard of care.

At GBB, we urge our clients to make sure they have an estate plan in place, and once in place to make sure it is reviewed regularly. We believe that reviewing our client estate plan is part of our job as fiduciaries. Contact a GBB advisor at (916) 269-0671 or complete our contact form to talk more about your estate planning needs.

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