It was my recent fall – documented extensively in previous columns – that compelled me to suggest to my husband that we review our estate plan. I guess I needed to remind myself that I am not immortal, and I wanted to be sure that our plan fits our current circumstances.
In these past few years, COVID has increased Americans’ awareness of the need to have a will, living trust or living will. According to a 2022 survey, people who have had a serious case of COVID said they were 66% more likely to engage in estate planning compared to those who had not.
However, that same survey found that 67% of Americans still have no estate plan. Even with good intentions, less than one third of adults follow through on establishing one.
When asked why, 40% of survey respondents say they just haven’t gotten around to it, 33% said they don’t have enough assets to pass on to their loved ones, 13% said the estate-planning process is too costly, and 12% said they do not know how to begin.
One of my friends (bless her heart) believes the actual creating of an estate plan will hasten her death (it won’t).
Most people with assets or a family should execute a will. An estate plan goes beyond a will and is a collection of documents that specify how you want your money and other assets distributed, making it easier for your loved ones to handle your affairs during a time of grief.
A trust is one component of an estate plan.
Ten years ago, my husband and I worked with an estate and elder law attorney to create our plan. We were motivated to do so because we were named as successor trustees of an elder couple’s trust.
It was a big responsibility, but it underscored for us the importance of establishing a trust to ensure that our wishes were followed. The elder couple’s trust gave us permission to speak with their healthcare providers, obtain a home equity loan on their behalf to pay bills, and make other medical, financial, and legal decisions when they were no longer able to speak for themselves.
After their death, it gave us permission to sell their house, cash in their securities, pay their final bills and distribute their assets according to their instructions (all of which would have been immense challenges had they not set up a trust).
Experts suggest updating your estate plan every five years. Ours is over 10 years old, so we were overdue to revisit it.
Given that we do not have children, and the proceeds of our trust will go to charities and our siblings or their children, we were less motivated to do a review. But as I said, my fall changed that thinking.
Both my husband and I are very glad we are doing this review because we found that we had not named our trust as the beneficiary with a couple of our assets. We also had not realized that our life insurance policies should be in the trust – that the trust should be named first, and the spouse second to avoid inadvertently causing a probate under certain circumstances.
The most important thing we will do after we update our trust is to sit down with my sister who is named as our successor trustee. She will be the person responsible for administering and settling our trust after we die. She will also be responsible for our care, along with financial, medical, and legal decisions in the event we both become incapacitated.
There is a lot to consider when developing an estate plan. My husband and I were not equipped to understand all the considerations had it not been for our estate and elder law attorney whose expert knowledge guided us.
Consider them a vital resource in your future planning.
