Here are the basics:
- If you don’t have an estate plan, make one.
- If you do have an estate plan, review and update it.
- Review and update all your additional documents.
- Know what’s coming and whether it impacts your plans
Create an estate plan
First things first: if you don’t have an estate plan, you need one. One of the many things we learned in 2021 is that unimaginable doesn’t mean impossible. We’ve seen and experienced many things we never believed could happen.
You need to be prepared for the unexpected — not just for your family but for yourself. People generally talk about estate planning as a way to care for your loved ones after your death, and it definitely does that.
But estate planning is about so much more than what happens when you’re gone. Documents like advanced directives and powers of attorney ensure that your interests are protected and your wishes are carried out if you become incapacitated or too ill to care for yourself. You want to ensure that someone you trust (and who knows what your wishes are) is making medical and financial decisions and signing legal documents.
Yes, you want the documents that will protect and support your loved ones. You want a will or a trust. Yes, if you have children, you want to name a guardian. Yes, you want to specify your wishes so that your loved ones have as little conflict as possible.
But remember: it’s not only for them. It’s for you too.
Steps you should take if you already have an estate plan
If you already have an estate plan, congratulations. You’ve taken an important step. But you’re not done yet.
Review your critical documents
Your estate plan is more than a will you write once and shove into a drawer. Your estate plan is a group of documents, and their efficacy will change as your life changes.
If you wrote your will before you started your business, had a baby, divorced your spouse, the will’s provisions may no longer be relevant. Or worse, they could have unintended consequences.
Now is the time to review your will or your trust, your power of attorney, and your medical advance directives. Do they reflect your existing life circumstances and your existing goals?
Update your beneficiary designations
These are the names you wrote on the applications for your retirement account, your bank account, or your life insurance policy. At the time, you may not have given a lot of thought to the question, especially if you were doing something like signing up for an employer-sponsored 401K during an orientation meeting with HR.
Unfortunately, out-of-date beneficiary designations (like to your ex-spouse or your parents that are no longer living) can create a lot of complications during the probate process. Updating them can feel tedious — you’ll have to contact each account manager — but it’s worth the extra work.
Review your life insurance policy
Life insurance is one of the best ways to ensure that your loved ones are cared for after your death. If you don’t have a life insurance policy, now is the time to get one.
Even if you don’t have a spouse or kids, you may want to get a policy to ensure that your loved ones are able to pay off your debts or pay for your funeral expenses.
If you already have a policy, review the terms. Do you have updated designated beneficiaries? Do the payouts reflect the financial needs of those beneficiaries if something were to happen to you?
Save and share your online passwords
Whether you keep your passwords in a paper notebook or stored in an app, people will need access to them if something happens to you. Make sure you’ve included them in a letter of instruction and have notified your family of its location.
You may also consider including language in your will that gives your executor power over your digital assets. That could mean anything from photos stored online to your social media or bank account passwords. In Georgia, a fiduciary can access some of these (like computer files) but not others (social media accounts) unless they have explicit permission in a will or revocable living trust.