As advisors and fiduciaries for our clients, we realize that when life gets busy, it can be easy to forget about your estate plan, resulting in outdated documents. To help avoid this issue and the subsequent problems that often come up, we have developed a short estate planning checklist of important matters that should be reviewed on a regular or periodic basis. Some of the items are things you can review on your own, while others we can help with as part of our advisory and fiduciary services.
- Update financial information. You may need to revise or prepare a new financial statement, including new retirement and cash flow projections as well as a graphical overview of your estate plan. We recommend reviewing this statement annually.
- Develop a statement on where important documents are located and who your important advisors are. Better yet, introduce them to your family. Don’t forget to provide safe deposit box instructions and keys as well as identify personal possessions and valuables. This needs to be updated whenever any document locations or advisors change.
- Review beneficiary designations on retirement and insurance plans. Particularly consider contingency designations where appropriate. Often times, secondary or contingency designations are not named, which can result in your family spending extra time and money to sort out these issues if the information is out of date. We recommend reviewing these designations annually.
- Understand the fiduciary roles, responsibilities and practical outcomes of your estate plan and of the designations you have made in your trust, wills, health-care and financial powers and beneficiary designations. Where possible and comfortable, explain the “why” behind these decisions. For example, if you established a testamentary trust for your children instead of an “outright” distribution, it might be a good idea to explain your reasoning. We recommend having these discussions every 3 years, and whenever these designations or your estate plan changes.
- Talk with your fiduciaries about your goals and values for yourselves and loved ones. In other words, share your hopes and expectations as well as any concerns you might have. If you have named a family member, possibly a child, as your personal representative or trustee they, of course, need to know this as do your other children. If they are a co-trustee with an independent trustee like First Western, it would be good to more clearly define roles and responsibilities in advance so that your co-trustees can better work together going forward. We suggest having these conversations on an ongoing basis when you are reviewing your plans.
- Write a letter or prepare a video for your family and loved ones about what has been most important in your life and work and what you want them to remember. This is a process and is something you continue to think about and work on as time and life permit.
- Have a conversation with your family about quality-of-life goals and your estate and financial plans as you are comfortable and where appropriate. This is a personal discussion and the timing will vary by family.
- Make sure your property and casualty insurance is updated and you have the appropriate amount of personal liability coverage. We frequently find that there are often gaps in coverage if this is not reviewed regularly. We recommend an annual review with your agent.
- Take a consolidated and integrated assessment of your investment plans to better measure potential “downside” risk and the sustainability of your spending plan and goals. This type of assessment should be considered every few years or more frequently if a transition event occurs like retirement, the sale of a business or change in your health or family circumstances.
- Revaluate your advisory team and better understand not only their compensation but the value and role of these relationships for your longevity as well as the next generation. We recommend reviewing this every 5 years.
- If you own a business, make sure your estate plan addresses specific directions for your fiduciary regarding the business and that any buy-sell agreements or successions plans are coordinated and up-to-date. For example, a current valuation should be included in any agreements, and life or disability buy-out insurance should be considered. We recommend doing this on an annual basis.
Although our outlined timeframes are good guidelines, we also encourage you to review these items on your checklist whenever a major life change occurs, such as the birth of a child or grandchild. Our team is always available to help you discuss and plan for any changes that happen throughout each stage of your life, so please do not hesitate to reach out to us if you have any questions specific to your financial world. We’d be happy to walk through the estate planning checklist with you.
Investment and insurance products and services are not a deposit, are not FDIC insured, are not insured by any federal government agency, are not guaranteed by the bank, and may go down in value.
First Western Trust cannot provide tax advice. Please consult your tax advisor for guidance on how the information contained within may apply to your specific situation.