Review Your Beneficiaries
An estate plan isn't limited to your will.
Many financial accounts and products allow you to designate a beneficiary, the person or people who may receive those assets after your death. Depending on the type of account and its terms, a beneficiary designation can play an important role in determining how that particular asset is transferred.
That's why reviewing your beneficiary information is an important part of estate planning.
Consider checking beneficiary designations associated with accounts such as retirement plans, investment accounts, life insurance policies and eligible bank accounts or other financial products.
Then ask yourself a simple question: Are these still the people I intend to name?
Life can change considerably after an account is opened. Marriage, divorce, the birth or adoption of a child, the death of a loved one or other changes in family circumstances may affect your wishes.
It's easy to update one part of your financial life while overlooking another. A periodic beneficiary review can help ensure your designations continue to reflect your intentions.
Your bank, financial professional, insurance provider and retirement plan administrator can help you understand the beneficiary information currently associated with your accounts and their processes for making changes.
For questions about how beneficiary designations interact with your broader estate plan, consider consulting an attorney or other qualified professional.
Choose Someone You Trust to Act on Your Behalf
Estate planning isn't only about what happens after you die. It's also important to consider what would happen if you were alive but temporarily or permanently unable to manage your own financial affairs.
A power of attorney can allow another person to act on your behalf in circumstances established by the document and applicable law.
Depending on the authority granted, that person may be able to help manage financial responsibilities such as paying bills, handling certain banking matters or managing other assets.
Choosing someone for this responsibility deserves careful consideration.
It should be someone you trust to act responsibly and in accordance with your wishes. You should also talk with that person ahead of time rather than simply putting their name on a document without their knowledge.
Because powers of attorney are legal documents and can provide significant authority over your affairs, consider working with an attorney to determine what arrangement is appropriate for your situation.
Don't Forget About Digital Assets
Today's financial lives extend well beyond paper statements and physical property.
You may have important information stored in email accounts, online banking platforms, cloud storage, social media accounts and other digital services. You might also receive bills electronically or manage investments and other assets entirely online.
As you organize your estate, consider your digital life as well.
Make an inventory of important digital accounts and determine what information a trusted person may need in an emergency. That doesn't mean keeping a piece of paper with every username and password sitting in an unlocked desk drawer. Sensitive information should always be stored securely.
Instead, think about how someone you've authorized could locate the information and instructions they need when the time comes.
Organize Your Important Documents
A carefully prepared estate plan isn't very helpful if no one can find it.
Keep important financial and legal documents in a secure location and make sure at least one trusted person knows how to access them if necessary.
Depending on your circumstances, your records might include your:
- Will and other estate planning documents
- Power of attorney documents
- Insurance policies
- Property and real estate information
- Bank and investment account information
- Retirement plan information
- Important contact information
- Funeral or other personal instructions
- List of important digital accounts
You may also want to maintain contact information for the professionals your family might need to reach, including your attorney, financial advisor, accountant, insurance professional and bank.
The objective isn't to leave sensitive information exposed. It's to make sure the people you've trusted to carry out your wishes aren't left searching for important documents during an already difficult time.
Have the Conversation
Documents are important, but communication can be just as valuable.
Estate planning can involve conversations that families would rather postpone. Still, talking with the people you've chosen to take on important roles can help prevent uncertainty later.
You don't necessarily need to discuss every detail of your finances with everyone in your family. But the people who will have responsibilities under your plan should generally understand that you've selected them and know where appropriate documents and contact information can be found.
These conversations can also give people an opportunity to ask questions and make sure everyone understands your intentions.
A little preparation today can make an already challenging situation easier for the people you care about tomorrow.
When Should You Review Your Estate Plan?
Creating an estate plan isn't necessarily a one-time event.
Your finances, family and priorities can change throughout your life. Even if you've already completed your estate planning documents, it's worthwhile to review them periodically and after significant life events.
A review may be particularly important after changes such as:
- Getting married or divorced
- Having or adopting a child
- Becoming a grandparent
- Buying or selling a home
- Experiencing a significant change in financial circumstances
- Starting, buying or selling a business
- Losing a spouse, beneficiary or other loved one
- Moving to another state
- Retiring
- Experiencing significant changes in family relationships
Changes in laws or financial circumstances may also affect your plans, which is another reason to periodically consult the appropriate professionals.
Even when nothing significant has changed, occasionally reviewing your documents, beneficiary designations and financial information can help you catch outdated information before it becomes a problem.
Estate Planning Isn't Just for Later in Life
One of the biggest misconceptions about estate planning is that there's a particular age when you're supposed to start.
The unexpected doesn't follow a schedule.
A young adult may not own a home or have substantial investments, but they may have a checking account, retirement savings, a vehicle and other assets. As careers, relationships and families grow, financial lives tend to become more complicated.
Rather than thinking about estate planning as something reserved for retirement, consider it another part of maintaining your financial life.
We regularly revisit budgets, insurance coverage, savings goals and retirement plans. Estate planning deserves a place in that conversation, too.
A Simple Estate Planning Checklist
If you've been putting off estate planning because you aren't sure where to begin, start with a few basic steps:
- Take inventory of your finances and property. Identify your important accounts, assets, insurance policies and financial obligations.
- Think about your wishes. Consider who you want to receive your assets and whom you trust to handle important responsibilities.
- Work with an attorney to prepare appropriate legal documents. This may include a will, power of attorney and other documents based on your circumstances.
- Review your beneficiaries. Make sure beneficiary information on your financial accounts, retirement plans and insurance policies reflects your current intentions.
- Organize important records. Keep documents securely and make sure an appropriate trusted person knows how to locate them.
- Talk with the people involved. Make sure those you've selected for important responsibilities understand their roles.
- Review your plan periodically. Revisit it as your family, finances and circumstances change.
You don't have to solve every estate planning question in a single day. Taking the first step is often the most important part.
We're Here to Help
Estate planning can involve difficult topics, but at its heart, it's about preparation.
Having a plan can help you maintain greater control over your financial affairs, clearly communicate your wishes and make things easier for the people you care about during challenging circumstances.
Your attorney, tax professional and financial advisor can help you navigate the legal, tax and investment considerations involved in developing a comprehensive estate plan. Your bank can also be an important part of that team.
At Kennebec Savings Bank, we're here to help you understand your accounts, review applicable beneficiary information and organize your financial life as you prepare for the future.
Because while none of us can know exactly what the future holds, we can take steps today to be better prepared for it.
