Doing Some Planning of My Own

I was recently reading an article in the Journal for Financial Planning in an attempt to find some good material for blogs on our website. The article focused on common estate planning mistakes made by clients.  My first reaction:  Wait, I’m making some of these estate planning mistakes!  I need to do some planning of my own!

For example, planning experts agree that a thorough review of your estate plan should happen at least every five years.  We diligently completed our estate planning while I was pregnant with Emery. But she turned five this year, and even though I’ve thought about it, we have not reviewed or updated my documents.

For a couple with young children, guardianship is very important.  Only 36% of US adults with children under eighteen have estate planning documents in place.  Sometimes, that’s because the couple could not agree on who would take care of their children if the parents should both die.  As tough as it may be, working through differences about a guardian preference is likely better than your state deciding on a guardian for your children without your input.

In our documents, we named three backups who would take care of Emery if something happened to us.  Now that Emery is here, we need to re-evaluate our choices. Do these named guardians still live nearby?  If they are not relatives, would we want them to live near family for easy visitation?  Has anything changed significantly in the lives of the potential guardians that would make taking care of Emery more difficult?  How does Emery connect with these guardians now that she is a little older?  Have I touched base with them to make sure they are still onboard with acting on Emery’s behalf?  All good questions to consider.

Did you know that 52% of US adults don’t have a will in place?  The majority of these individuals don’t have a will because they just haven’t gotten around to it.  A smaller percentage haven’t done it because they don’t want to think about death.

Most of our wills still followed our wishes with one exception. A big exception. When reviewing the document, we realized that we planned to give a percentage of our assets to a charity with which we are no longer involved.  This is a problem. In the past five years, I’ve gotten involved with two charities that we definitely would want to support if we both passed early. I have also learned more about the Community Foundation of Western North Carolina (CFWNC) programs that fit my wishes much more than giving to a single charity that possibly won’t even exist at my death.  CFWNC has options through which I can leave money to specific themes like women and children, animals, or the environment.

In general, our wishes listed in my advanced healthcare directive really haven’t changed. However, we need to review the people we listed to serve as our healthcare agent (in the case that we are unable to make decisions by ourselves) and make sure they still make sense as options. Confirming with them that they are still good with carrying out healthcare power of attorney responsibilities is important.

Not much has changed with our wishes in terms of who would act as our attorney-in-fact (the person identified in our durable power of attorney document who can make financial decisions on our behalf). However, it’s been five years since we updated our document locator for our attorney-in-fact. Quite a lot has changed:  we have a different house, purchased additional property, have different vehicles and different bank accounts.  If we passed today, anyone using the current draft of our document locator as a primary resource, would be starting in a hole.

In most cases, the beneficiary designation on a retirement account or life insurance policy overrides your will.  I make this comment frequently in workshops, and people are often shocked.  They might have named beneficiaries years and years ago, but thought when they updated their will, everything else changed too. This is often not the case and can void your wishes along with making estate administration very messy.

Part of our five-year update will also require a review of my beneficiaries.  We have gotten more life insurance and opened additional financial accounts since we did our estate planning.  Outside of the five-year update, beneficiary designations should be reviewed when your spouse or named individuals passes away, the birth of a child, marriage, divorce, or remarriage, just to name a few.

Even for a financial planner, working carefully through estate planning documents looking for necessary updates is not an enticing project.  But the energy, and money, expended in getting your original plan in place could be wasted if you don’t discipline yourself to adopt the five-year follow-up rule.

Source:  Are You and Your Clients Making These Estate Planning Mistakes?  Journal of Financial Planning, April 2019.

Jennifer Adams


While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters.  You should discuss tax or legal matters with the appropriate professional.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.