Your 20-year old will is not a plan anymore

Your 20-year-old will is not a plan anymore.

Most people who have an estate plan got it done once, years ago, felt the relief of having handled it, and never looked at it again. If your will is fifteen or twenty years old, here is the uncomfortable truth: it is not really a plan anymore. It is a document describing a life you no longer live. And the gap between the two is where families run into expensive, avoidable problems, usually at the worst possible moment.

This is not a suggestion that you did something wrong. Getting a will done at all put you ahead of most people. The issue is that an estate plan is not a one-time task. It is a reflection of your life, your family, and your assets at a moment in time, and all three of those have changed since you signed it.

What has changed since you signed it

Think about what your life looked like when you last updated your estate plan, and what it looks like now.

The children who were minors, with a named guardian, are grown adults now. The guardianship clause that mattered most then is irrelevant today, and the plan may say nothing useful about children who are now capable adults with families of their own.

The house you owned then may be worth several times what it was. The accounts you had then have grown. An estate that was modest when the will was written may be substantial now, which changes the questions the plan needs to answer.

The people named in the document may no longer be the right people, or may no longer be here at all. The executor you chose twenty years ago, a parent, an old friend, may have passed or may no longer be someone you would choose. The same is true of a named trustee or the person given power of attorney.

And the law itself has changed. Estate tax thresholds, state rules, the treatment of inherited accounts, all of it has moved, sometimes more than once, since your plan was drafted. A plan built around the rules of two decades ago may not do what you think it does under the rules of today.

The trap most people do not know about

Here is the part that surprises even careful people, and it is the reason "I have a will" is not the same as "I am covered."

Many of your most valuable accounts do not pass through your will at all. Retirement accounts, life insurance, and often investment accounts pass by beneficiary designation, the form you filled out when you opened the account. That designation overrides your will. It does not matter what your will says. The money goes to whoever is named on the account.

Which means if you named a beneficiary fifteen years ago and never looked again, that is who gets the money, even if your will says something completely different, even if that person is an ex-spouse, even if a named trust no longer exists, even if your life has changed entirely. People spend money updating a will and never check the beneficiary forms that actually control where the largest accounts go. The will gets the attention. The forms do the work. When they disagree, the forms win.

The version of this I keep seeing lately

There is a worse version of this than the wrong beneficiary, and I have watched it play out several times recently with people inheriting from parents in their eighties and nineties. It is the account with no beneficiary named at all.

When an account has a valid beneficiary on it, it passes to that person directly, quickly, and usually at no cost. It skips probate entirely. When that same account has no beneficiary, or names someone who has already passed, it does not have anywhere to go on its own, so it falls into the estate and has to go through probate, the court process for settling an estate. And probate is slow. I have seen accounts that should have transferred in a couple of weeks get stuck in the courts for close to a year, tied up and inaccessible to the family, all because a single form was left blank decades ago.

Sit with how avoidable that is. Naming a beneficiary is one of the simplest and cheapest things in all of financial planning. It is usually a two-minute form and it costs nothing. Leaving it blank turns a fast, free, private transfer into a slow, public, sometimes expensive court proceeding, at the exact moment a grieving family least wants to deal with it. I cannot stress this enough: check that every account that can name a beneficiary has the right one on it. It is the highest-return few minutes you will spend on your estate, and it is the thing people most often skip.

Where my lane ends and your attorney's begins

I want to be clear about what I do here and what I do not. I am not an estate attorney, and updating your will, your trust, and your legal documents is their work, not mine. Nothing here is legal advice, and the specifics of your plan need a qualified estate attorney who can look at your actual situation.

Where I come in is the financial side that sits right next to the legal one. Beneficiary designations on the accounts I help you manage, making sure they match your actual wishes and your legal plan rather than contradicting it. Whether the way your accounts are titled makes sense. How your retirement accounts, which we have talked about throughout this series, fit with your estate goals, since the same traditional IRA that drives your tax planning also passes to your heirs under rules that matter. These are the places where the financial plan and the estate plan have to line up, and where I coordinate with your attorney so the two are actually pointing the same direction.

That coordination is the whole point. An estate plan and a financial plan that were each done well, but done separately and never checked against each other, can quietly contradict each other for years. The will says one thing, the beneficiary form says another, the account titling says a third. Getting them to agree is not one professional's job. It is the financial side and the legal side working from the same picture.

What to do

If your estate documents are more than a few years old, or if anything major has changed in your life, your family, or your assets since you signed them, it is time to have them reviewed by an estate attorney. That is the starting point, and it is theirs, not mine.

Alongside that, it is worth reviewing the beneficiary designations and titling on your financial accounts, so that what your will and trust say and what your accounts are actually set up to do are telling the same story. That part I am glad to help with, and to coordinate directly with your attorney so nothing falls between the two.

The rules and thresholds in this area change over time and vary by state, so the details are worth confirming with a qualified attorney for your situation. What does not change is the principle: a will signed twenty years ago describes a life you have outgrown, the accounts that matter most may not even pass through it, and making sure the legal plan and the financial plan agree is work that has to be done together.

If it has been years since anyone looked at how your estate plan and your financial accounts line up, that is exactly the kind of thing worth reviewing, alongside your attorney, before it becomes your family's problem to sort out. Start a conversation.

DISCLOSURES: 

This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. 
 

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial. They also have access to non affiliated third parties that specialize in creating trusts and wills for use by LPL advisor’s clients.