Estate planning is all about preparing for an uncertain future. But if you haven't included backup plans within your estate plan, you may not be fully prepared. Why?
Estate planning is best done long before there is a need to enact your arrangements. But this means that anything could happen between when you draft a document and when it needs to be used. Changes in your financial situation, changes in relationships, changes among your family or friends, and changes in your health can make some or all of your estate plan of little use when a need arises.
To avoid such an outcome, what sorts of backup plans should you include? Here are a few of the most common and most important.
Alternate Executor
First and foremost, you should name at least one backup executor who can take over if your primary executor can't do the job. The position of executor can be a challenging one. It can take significant amounts of time and legwork, and the process can take months or even years. When it's time, what if your executor can't take on these responsibilities? What if their mental or physical health prevents them?
A backup (alternate) executor or two is important to ensure that your estate plan is handled the way you want no matter what. If you fail to name someone, your estate will be delayed as the probate court determines who it will appoint instead. And that person may not be who you wish.
Distributions Upon Predeceasing
When you make an estate plan, the assumption is that you will pass away before all the named heirs in your will or trust documents. However, occasionally, this is not the case. For instance, an adult child may pass away before you due to an illness or an accident. If you then pass away before updating your estate plan, the portion of that child's inheritance has no clear recipient in lieu of them.
The good news is that you don't have to run out and alter your will if something tragic happens to an heir. Instead, you can stipulate what happens to each heir's inheritance in this event. You might assign it to their own children or grandchildren, redistribute it among remaining heirs, or assign it to a third party, for instance.
Contingent Beneficiaries
Beneficiary designations allow you to specify who gets the funds in an account if you pass away. However, as with heirs in your will, it's good to consider what you want to happen with that money if a named beneficiary predeceases you. Many people forget who they named as beneficiaries on different accounts and may forget to change them if something happens. So it's vital to name contingent beneficiaries whenever possible.
Powers of Attorney
A power of attorney is your authorization for a named person to make certain decisions if you become incapacitated. You can name a power of attorney for one single area of decision-making, such as medical decisions, or for a multitude of decisions. You can also name a power of attorney only for a limited time, like during an illness, or for an unlimited time. Powers of attorney are your personal backup plan.
Does your estate plan need more backup plans within it? If you're not sure what will happen if anything changes in your life or your heirs' lives, then it probably does. Start by learning more about contingencies, powers of attorneys, and alternates by meeting with an experienced estate planning attorney in your state today.
Florida residents can call on the team at
Donald B. Linsky & Associate PA. We will assess your estate plans and your goals to help you craft a plan that carries out your wishes no matter what life brings.
