The world has changed rapidly, especially in estate planning. Even if you have a robust plan in place, reviewing and updating it is critical. People are living longer and need more options in their documents and life.
There are three areas that demand a review with a lawyer to bring your will, trusts and powers of attorney up to date:
1. Digital assets: Update legal documents to include your life in the cyber world. Consider the following: Do you have a Facebook account, as 180 million Americans do, or another social media account? What about digital subscriptions? And what about those digital pictures? Who will have access to them after your death?
This becomes more critical if you have a website or a blog, even if it is just for family use.
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There has been a lot of press about how you can name a “legacy” contact to access data via your phone after you die. But this does not cover your whole digital world.
Designating someone in your legal documents saves you the hassle of updating each new digital asset program. You can sometimes simply add an addendum.
2. Guardianship designations: A judge appoints a guardian to handle the business, medical and other details of daily life for an incapacitated person. The guardian must always act in the best interests of the person who needs care. With today’s issues around dementia and aging, lawyers are stipulating that guardians must be named to avoid a case from going to court later. Although a family member is most often appointed, you may not want your closest family member to manage all your affairs. Trustworthiness, time constraints and the location of the guardian all play a role in your decision.
3. Appropriate names in documents: Typically when documents are drawn up, a couple will name each other as executor or trustee. Children or trusted friends may be secondary agents. A single person may have a child or friends as their executor to handle the details after death. Adding an alternate backup executor or trustee has always been advisable. However, it is not enough these days. When originally set up, people were not thinking their loved ones would turn down the appointment, get ill, get sick or die before them.
If someone is not able to manage the legal duties because of incapacity, they would have to be declared incompetent before a new executor could be appointed. The extended transition takes time, paperwork and costs money, damaging your estate and extending its settlement.
As difficult as it is to imagine a child dying before you, a trusted friend turning down the responsibility or your own spouse unable to oversee the details, having additional names strengthens your documents.
Think of your estate planning documents as a living document you update every five years. When it comes to making these updates, do not think they are permanent. Life changes, we move, people grow apart, and family and friends die. Even estate law changes.
However, having them in place as best you can will make life easier on everyone. Once the bulk of your wishes are in place, periodic reviews can become routine and cost significantly less than the original meeting with your lawyer.
Finally, do not stop reviewing and updating just because no one comes to mind to serve as designee. And especially do not become part of the 60% of Americans without wills. Consulting with your lawyer now, and periodically thereafter, will allow the documents to be helpful in your time of need.
CD Moriarty is a certified financial planner, a columnist for MarketWatch and a personal-finance speaker. She blogs at MoneyPeace.