How often I hear clients breathe a sigh of relief after signing their “big” estate planning documents. By “big” estate planning documents, I mean their Last Wills and, if they are using a Revocable Trust plan, their trusts. Getting those documents signed is, of course, a big step and, when it is taken, worth some self-congratulation.
But it is only half the job. Maybe less than half the job.
The other half concerns one’s assets. Each asset is its own little estate planning project. As to each asset, the question is this: Will a given asset that belongs to the client travel at the client’s death according to the plan expressed in the “big” estate planning documents? It doesn’t always happen that way. The estate plan for a particular asset may turn out to be different from the “big” plan. The plan for that asset may be obsolete, inadvertent, or simply wrong.
A client of mine had been married to his second wife for well over 20 years. He had worked for the government all his life, from time to time moving from one agency to another within the government. By the time of his retirement, he had numerous government benefits, including life insurance, some arising from one agency and some from another. He told me that he had changed the beneficiary designations for all of his benefits years and years ago, so that his second wife would receive them if he died: not his first wife, who had originally been the beneficiary.
He had no Last Will, however, and we quickly handled that problem. But he died before we could check on the government benefits.
After his death, we went back to check on the benefits for his widow. We confirmed with several of the agencies that the client had, indeed, changed the beneficiary designation of the pertinent benefit to name his second wife. But one of them, we learned, he had missed. And that benefit went to the first wife. The beneficiary designation for that benefit was valid – despite the divorce – but entirely contrary to his plan.
Each asset one owns needs to be properly identified, thoroughly documented, and the question needs to be asked, “Who gets this asset if I die?” If the answer is not satisfactory, then there is work to do, even with the more impressive “big” estate planning documents already in place.