National Estate Planning Awareness Week: Why Reviewing Your Estate Plan Matters

By Genny Bernstein, Shareholder
Florida Bar Board Certified Elder Law Attorney

National Estate Planning Awareness Week is an important reminder to understand not only your estate plan but also the financial considerations that play a vital role in carrying out your wishes. An effective estate plan involves more than preparing legal documents. It requires thoughtful coordination of your assets, financial accounts, beneficiary designations, and the individuals you trust to act on your behalf.

An estate plan may include trusts, a Last Will and Testament, powers of attorney, health care directives, property deeds, business succession plans, and other legal documents tailored to your individual circumstances and goals. While these documents establish the foundation of your plan, ensuring that they work together with your financial arrangements is equally important.

Choosing the Right People to Protect Your Interests

One of the most important aspects of estate planning is selecting the appropriate individuals to make financial and medical decisions on your behalf if you become unable to do so yourself. These decisions also include determining who will carry out your wishes and help manage the administration and distribution of your assets after your passing.

Your estate plan identifies the people you trust to serve in these roles and provides instructions to help them understand and honor your wishes. Appointing the right individuals is an important first step, but it is equally important to ensure that those individuals remain capable, willing, and appropriate for the responsibilities entrusted to them.

Choosing someone to act on your behalf requires careful consideration. Do they understand your values and respect your wishes? Can you rely on them to make thoughtful decisions during difficult circumstances? Are they financially responsible and capable of managing the responsibilities associated with their role?

These are important questions to consider, both when creating your estate plan and throughout your lifetime.

Your Estate Plan Should Evolve as Your Life Changes

Creating an estate plan is an important accomplishment, but it should not be a one-time task. An estate plan should never be prepared, placed in a drawer, and forgotten. Life happens, and circumstances can change gradually or unexpectedly. Your estate plan should evolve to reflect those changes.

As a general practice, consider reviewing your estate plan every three to five years, as well as following significant life events such as marriage, divorce, the birth of a child, the loss of a loved one, changes in financial circumstances, retirement, or the sale or acquisition of a business.

During these reviews, take a fresh look at the individuals you have appointed to act on your behalf. For example:

• Do your appointed agents still understand your wishes and share your values?

• Have any of them experienced cognitive decline or other health-related changes that could affect their ability to make sound decisions?

• Have family conflicts or changes in relationships affected their judgment or willingness to act in your best interests?

• Have personal issues or financial difficulties in an agent's own life raised concerns about their ability to manage your financial affairs responsibly?

• Are the individuals you originally selected still willing and able to fulfill their responsibilities?

Someone who was the ideal choice when your estate plan was created may no longer be the best choice today. Reassessing these appointments can be difficult, particularly when family members or longtime friends are involved. Nevertheless, these are necessary conversations and decisions that can help protect your interests and provide greater peace of mind for you and your loved ones.

Aligning Your Financial Accounts With Your Estate Plan

Your legal documents are only one part of the equation. Reviewing your financial accounts, account ownership, and beneficiary designations is equally important to ensure your assets are distributed as intended.

Even a carefully prepared estate plan may not achieve its intended results if your financial accounts and beneficiary designations are overlooked. Your legal documents and financial arrangements should work together to support your overall goals.

Consider the following questions during your next estate plan review:

Is your trust properly funded?

If you have established a trust, have the appropriate assets been transferred into it or otherwise coordinated with your estate planning strategy? Are your accounts and other assets titled correctly to support your estate planning objectives? Creating a trust is an important step, but ensuring that your assets are properly coordinated with it is equally important.

Are your beneficiary designations current?

Retirement accounts, life insurance policies, and certain financial accounts may pass directly to named beneficiaries rather than under the terms of your Will or Trust. Outdated beneficiary designations can result in assets being distributed differently than you intended. Review these designations regularly, especially following major life changes.

Does your plan address probate?

Do you understand which assets may need to go through probate and which may pass directly to beneficiaries or surviving joint owners? A Will alone does not necessarily avoid probate. Understanding how your assets are owned and how they will be transferred can help you and your family prepare for the future.

Have you reviewed your retirement accounts?

Confirm the beneficiary designations on your traditional IRAs, Roth IRAs, 401(k)s, and other retirement accounts. Changes in marital status, family relationships, or the loss of a beneficiary may require updates to these designations. Because beneficiary forms can determine who receives these assets, they deserve the same attention as your other estate planning documents.

Have you addressed marital agreements?

If you have a prenuptial or postnuptial agreement, confirm that your estate plan and beneficiary designations are consistent with the agreement's terms. Depending on the agreement, the account involved, and applicable law, a spousal waiver or consent form may be necessary. Work with the appropriate legal and financial professionals to confirm that any required documentation has been properly completed and submitted.

Have you updated your plan following the loss of a spouse or beneficiary?

If your spouse or another named beneficiary has passed away, review your beneficiary designations and related estate planning documents promptly. You may need to identify replacement beneficiaries or revise other provisions to ensure your assets are distributed according to your wishes.

Coordinating Your Legal and Financial Planning

Estate planning is most effective when your legal documents, financial accounts, and beneficiary designations work together. A disconnect between these elements can create confusion, delays, and unintended outcomes for your loved ones.

For example, a trust may be properly drafted but not fully funded. A retirement account may still name a former spouse as its beneficiary. An individual appointed to make medical or financial decisions may no longer be the most appropriate person for that responsibility.

These details can have significant consequences. Reviewing your plan with your estate planning attorney and financial professional can help identify gaps, address inconsistencies, and ensure that your arrangements continue to support your objectives.

Taking a coordinated approach can also help you better understand which assets may be subject to probate, how your beneficiaries will receive their inheritances, and whether your current arrangements reflect your intentions.

A Current Estate Plan Is a Lasting Gift to Your Loved Ones

An estate plan is more than a collection of legal documents. It is a plan designed to protect your interests, communicate your wishes, and help guide the people you trust during some of life's most challenging moments.

Taking the time to review your estate plan can help identify outdated appointments, gaps in financial planning, and inconsistencies between your legal documents and financial accounts. Addressing these issues during your lifetime can help reduce confusion, minimize unnecessary complications, and provide greater clarity for your loved ones.

If you have not reviewed your estate plan recently, consider scheduling a review with your estate planning attorney and financial professional.

National Estate Planning Awareness Week is an excellent reminder to revisit your plan, review your financial accounts, and confirm that the right people and provisions remain in place to carry out your wishes.

The information provided in this article does not, and is not intended to, constitute legal advice; it is for general informational purposes only. No reader of this article should act or refrain from acting on the basis of this information without first seeking legal advice from counsel in the relevant jurisdiction to ensure the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.