How Often Should I Update My Financial & Legal Documents?


You should be checking on your accounts as often as you review your estate plan. In general, we recommend an estate plan review every three to five years. Any change in life circumstances or family, or changes in the law, will warrant a review of your plan as well.

The proper titling of your accounts is crucial to the success of your estate plan. Depending on the type of asset, it can be in your sole name, in a joint ownership, or as a convenience account. A convenience account allows another individual to take action on the account, such as signing checks and making payments. They are not a true joint owner of the account. A convenience account is subject to a beneficiary designation or distribution under Will or Trust.

Beyond titling, accounts also have a beneficiary or transfer on death designation. This dictates who inherits the account assets after the death of the account owner. Life insurance policies and retirement accounts allow beneficiary designations that avoid probate.

An estate plan often includes health care directives such as health care proxy and living will, power of attorney, last will and testament, and potentially a trust. Estate planning is not one and done. As you change, so should your plan. Titling and after death designations trump a Will or Trust. Not considering these titling or after death designations when creating a Will or Trust can render an estate plan useless.

For example, take the scenario of a young couple starting out, living in a rental, and just had their first child. The assets they have may consist of a 401k with their employer and life insurance. They are likely concerned about who will be the guardian of their child if something should happen to both of them. The Will should name a guardian for their child, and any future children they may have. Additionally, the Will must have a testamentary trust to hold the retirement assets and life insurance proceeds. They would name with a trusted friend or family member as trustee to manage these funds. They always need to make the necessary changes to their beneficiary designations.

Periodically, this couple should revisit their estate plan. They should be thinking about who they named to act as guardian and trustee. Are the designated individuals still appropriate? Have they attained more assets that need to be handled in a different manner? Do they now have a taxable estate? Beyond their personal circumstances, there may be a law change that could impact the way the plan was set up. As an example, the Federal SECURE Act went into effect in January 2020. This law changed how individuals inherit tax-deferred retirement accounts, including 401ks. This change in the law warrants a review and possible update to existing Wills.

Fast forward many years later. This same couple now has adult children. They no longer need the guardian listed in their wills. In fact, the adult child may now be the appropriate choice as agent under power of attorney and health care proxy. It may also be wise to create a trust for estate tax planning, Medicaid planning, probate avoidance, or some other strategy.

Estate plans should change with you, adapting to your life and changing laws. So often we see individuals forget what is in their documents or they title accounts without considering the consequences of those choices. Your estate planning attorney should be asking about each asset, how it is titled and how you want it to be distributed. With this information, they can create a comprehensive plan and corresponding documents that makes sense for you.

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Burner Law Group, P.C.

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