Estate Planning Tune-Ups

If you're reading this, there's a fair chance we've worked together on some estate planning once upon a time. And if that planning is anything like your lawnmower or snowblower - stick with me here - they all need a tuneup once in a while. After all, none of them were inexpensive (I admit), and if they're going to hold their value, they require some attention periodically - like before the need for them arises.

Sorry, I can't be of much help with those pieces of equipment, but I can tell you a bit about the potential problems with your documents, which usually consist of a will, perhaps a revocable trust, one or more durable powers of attorney, and a health care directive.

Let's start with some good news about the will and trust: Those documents don't get stale or lose their effectiveness just by the passage of time. We've successfully processed wills that were 50 years old and had wax seals - seriously. The only reason they need attention is that very few family situations remain the same over time. Some family members surprise us and become the ones we now want to take on the important duties of executors of the will or trustees of the trust, while others we thought we could depend on for those roles develop problems of their own and no longer seem like good choices to protect our nest eggs - or to receive a share of them as beneficiaries.

For example, maybe we thought the kids or grandkids would be financially responsible by 18, but now that they're actually there, it seems like what you worked so hard to accumulate would pass through their hands like water - and 30 (or more) is looking like a safer age for them to make the right choices. If that's the case, a trust that would protect the nest egg once you're gone could be a helpful addition to your planning for those lovable but still unstable offspring.

Maybe you just did a simple will back then because there wasn't much to leave to anyone in those days, and now you've worked hard and invested wisely, or maybe inherited once or twice, and there's more at stake than you ever imagined. That might also suggest a trust, if for no other reason than to keep it all out of the clutches of the probate court. Probate has become a seven-letter word that most families describe more like it had four letters - but I've told you that before and I won't belabor it here.

Before I move on, though, please take note that if you've divorced since that last will or trust was written, New Hampshire law will protect you, and the provisions for the former spouse will be automatically revoked. That process only kicks in, however, once the divorce is final. So, for the year or so while the divorce negotiations are dragging along, the soon-to-be-but-not-yet-ex-spouse will continue to be your beneficiary unless you revise your will and trust during that seemingly endless process.

One more dangerous corollary is that the law has no protective effect on beneficiary designations for IRAs and other retirement assets or for life insurance proceeds, even once the divorce is final, so don't rest until you've also made any of those beneficiary revisions that may be necessary - or you may be making a much more generous property settlement than you had in mind.

Then, how about those durable powers of attorney? They're called "durable", not because they last forever but because they remain in effect even after we've lost our capacity to do those legal and financial jobs we now need someone else to do for us. Their unquestioned durability only lasts about 10 years, though, and then banks and other institutional places begin to look askance and wonder whether they've grown stale and lost their durability. Plus, those institutions have really begun to push back about powers of attorney in general, and they don't want to assume that the holder has a right to do something unless they see it described clearly, even though the documents say they authorize anything the creator of it could do for him/herself. Nope, not good enough, which is why we keep adding new provisions to swat down those objections. For example, 10 years ago the handling of someone's digital assets wasn't nearly the issue it is today.

Finally, health care directives, which are really powers of attorney over someone's health and medical issues, keep evolving, too. The legislature has revised the statutes for those documents several times in the past 10 years, and while the older ones are still valid, people's views on end-of-life issues and who can make those decisions for them probably change more than for any of the other documents I've mentioned. Ten years ago it may have been fine to name a contemporary sibling to hold that critical authority, but now the sibling perhaps also needs help and the careless teenagers we wouldn't have trusted to put gas in the car are nurses and teachers and would be much better choices.