We all make New Year’s Resolutions (though few of us stick to them — me included). A few weeks ago, I wrote about financial resolutions for the new year, but today I want to limit that to just estate planning. What moves do you need to make in 2021 in order to get your estate in order. If there is anything we learned from 2020, it’s that things can change very quickly in life, and not always for the better. As I’ve said before, settling a very well planned out estate is still a very stressful process, so dealing with one that wasn’t properly planned can be a nightmare. Here is a list of things that you should look to address in the coming year if you have not dealt with them in the last few years. Even if you have, they might be worth revisiting with your estate planning attorney.
First, let’s review the documents that you may want to consider.
1. You need the basics, such as a will, which helps to pass along your “stuff” and non-retirement assets. Retirement accounts, life insurance, and annuities pass by way of a named beneficiary, so they don’t go through your will. If you change your will, it does not change your beneficiaries on retirement and insurance policies.
2. You may also need a power of attorney (POA). A POA allows someone else to act on your behalf when you are unable to do it for yourself. A POA can be limited in scope or broad based.
3. An advanced directive or a POLST (Physician Orders for Life-Sustaining Treatment) is different from a POA in that it communicates your wishes regarding end-of-life decisions such as being kept alive by artificial means, etc.
4. Trusts can also be necessary for a variety of reasons including minor beneficiaries, disabled children, irresponsible beneficiaries, or creditor issues. One of the best benefits of a trust, in my opinion, is that assets in a trust are both not subject to probate, and they provide privacy. Assets in a trust are not a public record like they are in a will.
Next, you want to look at all of your assets that pass outside of your will, such as life insurance, IRAs, annuities, etc. Those all pass via a beneficiary designation. I can’t stress this enough; you need to review these beneficiary designations often. I’ve seen too many horror stories due to individuals never reviewing these and leaving the wrong people as a beneficiary. In addition, receiving funds that were not properly planned out, can potentially cause personal and financial problems for beneficiaries. Discuss your beneficiaries with your financial advisor, CPA, or estate planning attorney on a regular basis.
You may also want to review who is handling your estate for you. I often see plans that name a sibling to be the executor/executrix from 30 years ago. If that sibling is now at an advanced age, you might want to consider an alternate person for that role.
Lastly, don’t forget to plan for the non-conventional assets. Things like digital/cyber assets are often overlooked in many plans. These might include your online banking, mobile devices, email accounts, as well as social media. Even your computer itself and all the photo sites such as Snapfish or Shutterfly. Addressing what you want done with these assets and who controls them are important things to address in your plan.
Start 2021 off right by getting this out of the way now so that you can focus on other important things in life like time with your family and life after COVID-19 (hopefully soon).
T. Eric Reich, CIMA, CFP, CLU, ChFC is president and founder of Reich Asset Management and can be reached at 609-486-5073 or firstname.lastname@example.org.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.