Maintaining and Updating Your Estate Plan

Estate Planning is an important step for all adults. But, once your Estate Plan is in place is it important to maintain your plan.

Attorney Sarah J. Kons appeared on WHBY’s Fresh Take with Josh Dukelow to discuss how to keep your plan up to date and the potential, unintended consequences of an outdated plan.

Josh: Joining us now on the Settlers Bank phone line, Sarah Kons from Hooper Law Office. Sarah, good morning.

Sarah: Good morning, Josh.

Josh: How are you doing?

Sarah: I'm doing all right. How are you?

Josh: That's good. I'm always doing better on days when the sun is shining. The clouds tend to bum me out a little bit. So I'm doing great today. We've got a nice one out there. And we're going to have to make the most of it, because there's not going to be nice ones coming for a little while yet.

Sarah: Yeah. It sounds like it. 

Josh: Yeah. So we will do our best. We've been talking now for a while. Sarah, this is like week eight or nine, I think, of me broadcasting from home. We've been under these safer at home restrictions now for more than a month and a half. But we have been urging listeners that, even in these conditions, they can take action to get their estate plan made. 

I know you've told us about some of these safer office practices. Are finding that you're able to meet your customers' needs while still maintaining these safer practices?

Sarah: Actually, I've been surprised at how effective it's been. Unfortunately, there are certain things that we can't do electronically. They're just too many exceptions for estate-planning documents when it comes to electronic notarizing and things like that. So some of our subjects have to be done on paper in person. Which is why we've done the contact-free signing.

We actually just posted a video. We had one of the attorneys at our office kind of walk through that process so people could better understand it. And it's been pretty effective. The phone reviews that we do with clients regarding their documents, sending them drafts and things like that, walking through them. I miss the face-to-face communication. You do miss out on some things by not always being able to see the person. Video conferencing helps with that. But it's actually been an easier transition than I expected.

Josh: I'm so thrilled to hear that. Because I know from extensive history that I have with notions of estate planning just how important it is to have a plan in place. And particularly at a time when we're dealing with so much uncertainty related to public health. This is a time like no other where having that plan in place is key to our mental health and our peace of mind knowing that we have what we say is our plans in order. 

But Sarah, we're here to talk today, because once you've got that plan in place, the job isn't done. There are necessary steps for updating and maintaining estate plans as well.

Sarah: That's right. I do regular reviews with my clients. I tell all of them that in order to become a client of mine, you have to agree to come back and see me at least every five years so we can walk through your documents and talk about what's changed for you. 

I've just done a couple of different reviews this week. And one of my clients, I was talking to them and I was looking at the information I had about their kids. I said, "OK. So your daughter was a waitress and attending school the last time that we met."

And they started laughing. Apparently, she had graduated from medical school at that point and had been practicing in some sort of medical field. She was also married with a child, and I had her as single.

So people forget how dramatically their lives can change in even sometimes a short period of time. I had another client that I met with where we were talking about their documents and had brought with them their wills that had been done years and years ago. And one of them made the comment about, "Well, our kids aren't minors anymore. They're all adults. So I'm assuming these wills are no longer valid."

That's a very common misconception. The fact that you have guardians for minor children in those documents, that may no longer be applicable to your situation. But any of the other provisions that you put in there are still your plan as long as you haven't created a new one and signed one to replace it or have voided it intentionally. It's still your plan even if your kids are no longer minors.

So people think that if their circumstances change that things just somehow become inapplicable. And unfortunately, that's where we see a lot of the mistakes or a lot of the stories that you hear about things going really sideways tends to be those provisions that people just kind of forgot about or assumed would just no longer be applicable because that wasn't their situation.

Josh: Yeah. I want to reinforce that, because that's one of the main take-aways from our conversation today is when you fail to maintain your plan, it doesn't just go away. It doesn't just not apply anymore. This creates more problems for you. And so keeping the plan up to date is key. Because like you said, unless you've superseded it with a different plan, whatever that plan says is what will be taken as your order. And even if it doesn't make sense, the courts are going to try to follow those orders.

Sarah: Right. Exactly. And if you've done anything specific in your plan with a will or if you have a trust-based plan. You also have to remember that what you own and how what you own is guided by your plan will change if what you own changes.

So if you have a trust and you buy a new house or buy a new car, you don't use the name of your trust, well, now that asset is either going to have to take a different path to get into your plan or it may not get in there at all. 

With a will, I see a lot of wills where there was an update done by maybe an attorney that didn't practice a whole lot of estate planning or they did like LegalZoom or some do-it-yourself kind of planning. And they don't realize that, "Yeah, I have provisions in my will for my minor children so they don't get all of their inheritance at the age of 18. But I didn't realize that because I have them beneficiary designated directly on my retirement account and my life insurance policy, that it doesn't matter that my will says that if I'm not sending it through my will, it's inapplicable anyway. 

So it's not just about how your plan or the documents you've created change. It's also about how what you own changes. Because you have to make sure that those two things still make sense.

Josh: When we come back after the break, Sarah, I want you to sort of walk us through the process of review. You said you just did a couple of them, and I want you to just explain how that works, how long it takes, some of the questions that you ask. 

But before we leave this segment, I want to get a sense of sort of where the ownness is. Is this something that is better done sort of as one big revision every three to five years or should people be coming to you every time a job changes, a retirement account changes, a new grandchild arrives? Should it be every event that triggers an update or should you be looking at events over the course of time periodically?

Sarah: It's definitely a typical lawyer answer, which is it just depends. Unfortunately.

Josh: I suspected that.

Sarah: Significant changes in health especially can indicate a need to get in and do a review sooner. That is one of the things that we tend to reinforce with our clients. If you have major health changes, please come in quickly so that we can direct the issue as proactively as possible. 

Other things that change that are a bit more minor like a job change, unless it has a big impact on what your daily life looks like. Even the marriage of a child that they change their name doesn't necessarily indicate that you need to run out and hurry up and get your plan redrafted so that you're using their new name. It's sort of more of a combination, which is why we kind of use the five-year benchmark. If you haven't had your plan reviewed in the last five years, it's good to come in and do that.

I encourage my clients to send us, if they're uncertain as to whether or not they need to come in for a review because of some changes, send an email or give us a call. We provide a lot of documents that are sort of supporting documents with our plans that talk about how do you buy something or open a new account or purchase new life insurance or something like that, how you open it or list it or name it or designate it in a way that keeps it consistent with your planning. So hopefully, that helps maintain the active alignment portion that we've done.

But it's usually more of a combination of a lot of smaller changes. If there are major changes, then it's good to reach out.

Josh: Very interesting. And that makes sense. The more significant the change, the more necessary to get that change integrated into the plan right away [...] those more sort of peripheral changes that are happening, those you can catch on a periodic update. 

It makes a lot of sense, Sarah. But it is so important. So I'm glad you're here to tell us about it. 

When we come back, Sarah's going to walk us through what a plan review looks like. How does it work? What are some of the questions that get asked? 

And then, it's really important once you have your plan, once it is updated, that you communicate that plan to your loved ones. Sarah's going to offer some suggestions for how to bring up this topic, how to broach the discussion of your estate plan. It's, as we've discussed, not something a lot of people like talking about. But it is so important that people know your wishes. 

We're talking with Sarah Kons from Hooper Law Office about keeping a maintained estate plan. And we'll continue with that conversation when we continue with more Fresh Take right after this on WHBY.

Josh: Real local radio helping you keep your estate plans up to date with Sarah Kons of Hooper Law Office. She joins us on the Settlers Bank phone lines. And Sarah, we were talking about the need to keep our plans updated and all the different reasons that we might have to make some changes to our plans once they are set. Talk me through what a review looks like. How does this happen. I assume now this is happening via video conference or telephone. But what does that conversation entail?

Sarah: It is happening via video conference and telephone at this point. So we send out, in advance of the meeting, a packet. And the packet has a trust review form in it that we ask people to fill out. A lot of it is trying to capture changes in addresses, phone numbers, changes in information concerning loved ones. We also have a series of yes and no questions that we ask them to go through that, for us, kind of red flags certain things having changed being of the more important for us to address during the meeting. 

So we send out that packet. We also ask them to bring statements of things that are now probably different [...] like if they opened new bank accounts or bought new vehicles or things like that [...] in preparation for the meeting. When they come in, we basically walk through their information and make sure that everything that we have is consistent with what their current situation is. 

We talk through the design of the plan that we have created with them. A lot of times, there are things that people don't remember that they did in a certain way. So ensuring that they still like the age at which maybe a grandchild receives control over their share or talking about how things are directed if one of the beneficiaries passes. So kind of reviewing things to make sure it's still consistent with their current situation. 

And then talking through what their asset situation looks like too. What have they changed in terms of money and property?

Josh: So kind of getting a lot of those changes documented, getting the client thinking about those changes ahead of time, you get that on the sort of pre-review form. And I guess that, then, sort of sets the agenda for the conversation to follow?

Sarah: Right. Every plan that we review has sort of an overview of roles and responsibilities and planning. We call it the Name and Fiduciary Summary. It's sort of the list of all of your power of attorney agents, who all is listed on your HIPAA, who is your backup trustee. So all of these sort of roles and responsibilities within their planning, we send that in advance as well to kind of remind them, these are the people that you chose and the positions that you put them.

We also have to remind them to bring their plan. When we weren't reminding them [...] it's surprising to see how many people come to their review without bringing their estate plan with them. So the advance notice and request to bring their documents with them is always helpful as well. But we kind of walk through everything and remind them as to what they've done previously, and then, walk through the changes.

Josh: And that makes perfect sense. We talked a little bit in the first segment about what some of those changes are. Remind us of what some of those bigger changes are that would necessitate a more urgent review of the plan.

Sarah: Health is a big one. If somebody has had a significant change in health or they've declined in health, often we will [...] if we've done an estate plan for somebody and haven't really done the elder law portion of it, changes in health can indicate a more urgent need to maybe build in some elder law planning as well for the person or for the spouses. 

Changes in health, as well, for beneficiaries can mean pretty significant changes are needed in your planning. If you have a loved one that you've included in your plan that has suffered a disability of some sort, how they receive things from you can impact whatever their current situation is or what benefits they might be on. So those types of changes need to be addressed more quickly.

Josh: Yeah. That makes perfect sense. They have much more urgent potential impacts on how the plan would work and where the resources need to go.

Sarah, the one last thing I want to ask you about today. OK, so we've got our estate plan made. Now we know when and how often we need to be updating it and what that looks like. But the next step then, we're still not done. We now need to communicate to our loved ones what that plan says. How do you recommend folks broach that topic? How do we begin that discussion of this, sometimes, uncomfortable topic?

Sarah: Kind of the old-fashioned way of looking at it is hiding your will and not letting anybody see it until after you're gone. And unfortunately, that became very popular. And it's usually not the best way to go. 

One of the things that I find really helpful for families, I often recommend sending out electronic versions of some of their documents. Like their power of attorney documents, that Name and Fiduciary Summary that I talked about earlier that kind of goes through roles and responsibilities and the kinds of documents that have been created. That can be a really good jumping off point, because it doesn't talk about how much money you have or where you have it or who's getting what. It just goes through these are the people and the responsibilities that I've allocated for them.

I know Peter's probably mentioned on previous shows that people cannot do a good job for you if they don't know that they have a job to do. So walking through these roles and responsibilities, these types of documents can be very helpful in creating that. 

I also do a lot of family meetings. I really encourage my clients to bring in their loved ones, bring in anybody that's going to be participating or active in your planning so that they have an opportunity to meet me and ask questions so that they understand who they're supposed to call. I find it much more likely that a family member will reach out to me if they've met me in person previously. So I like to have that interaction at some point along the way, even if it's just by phone. 

And to email, sending out some of the documents or some information to other family members can be helpful as well if the client is comfortable with doing that. But all of this is sort of in preparation for them being able to step in and do what's needed. It's not only understanding what role they have or what document they're supposed to be using in order to act in that role. It's also making sure they have access to the information that they'll need and that they'll know where it is or where to find it if they do have to step into this role.

We talked a little bit about, in the last show, the pandemic showing people in quarantine or being stuck out of the country or in different areas where they couldn't get home, having power of attorney documents available to the people that you have listed as agents will enable them to step in for you until you're able to return to either your home or return to a position where you can actually do things for yourself again. 

It's having that access and having people aware of the fact that they are in these roles and enact that when necessary.  So the family meetings especially can be helpful.

Josh: I think you're absolutely right. Having made that contact for being a part of a conversation that includes the attorney who helped create the plan not only would give the family some confidence that what they're hearing is accurate but give the client the confidence, that what they're telling their family member is the accurate, important information that they need, especially for those who have a role to play, that they know what that role is and how to do it, where to access the information and documents that they need. 

In the same way that an estate plan review should come up every five years, I'd imagine a conversation like that is probably appropriate every five years or so as well, just as a refresher on what the plan says and who's expected to do what.

To get more information about maintaining your estate plan, check out the offerings for free [...] virtual estate planning seminars. You can get information on those and reserve your seat at EstatePlanningLive.com. 

Sarah Kons from the Hooper Law Office joins us every month and keeps us up to speed on keeping our estate plans in order. Sarah, it's great to talk to you. Thanks so much. 

Sarah: Always a pleasure, Josh. Have a great day, and enjoy the sun.

Josh: Yes, I'll do my best. Thanks so much.

Sarah: Thank you.

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