Maintaining the Estate Planning Package Properly

MAINTAINING THE ESTATE PLANNING PACKAGE PROPERLY

 

Introduction:

Creating an estate plan can be a prolonged and exhausting process.  It requires careful planning with a bevy of professionals and hard decisions that have to take into account death, ill health and taxes. As one client put it, it is a depressing and wrenching process to plan carefully for your own death. It is vital and important for your family’s wellbeing…but it is no fun.

Once the documents are executed there is a tendency to shove all the copies into a drawer or safe and not open that drawer again unless it is absolutely required.  When a member of the family asks about the estate plan, the tendency is to answer shortly that “it is taken care of,” and change the topic.  As the years go by since the plan was created, memory as to its details or even critical aspects may fade but there is little incentive to revisit the process that took so much energy to complete.

Such tendencies must be resisted.  One has a continuing responsibility to keep the plan in an organized and appropriate manner since by the time it is needed you are likely to be incapable of providing guidance to your family as to what documents exist where, how the plan works, and what your goals were.  If you are disabled or deceased, it will be a time of turmoil for your family, and they will be in no condition to conduct that search that may be necessary to find your critical documents.  The writer well remembers one close family in which the wife was nearly hysterical trying to find a durable power of attorney for health care while her children, away in college, tried to give her guidance on the phone as to where dad would have kept his key documents. The document was eventually found, sandwiched between his construction plans for his hunting lodge and past tax returns in a seldom used corner desk.

 A few hours planning by the father would have saved anguish and guaranteed his plans were adhered to.  You owe it to yourself and your family to consider taking the following steps.

The Estate Planning Portfolio:

Your estate planning portfolio is a recordkeeping system for your estate plan.  It should be broken into sections.  Each section will contain information and documents relevant to an important aspect of your estate plan. 

These are the recommended Estate Planning Portfolio sections:

1.         Revocable Living Trust.

This section should contain a signed original of your Revocable Living Trust.  You may choose to replace this original with a copy if you prefer to store the original elsewhere for safekeeping, such as in a safe-deposit box or fire-proof cabinet.  If you do not include the original in this section, make sure you tell people in writing where the original is kept. 

Your Revocable Living Trust is the foundation of your estate plan.  It contains your instructions for your own care and the care of your family if you become disabled, as well as for the distribution of your assets upon your death.  Your Revocable Living Trust allows you to keep your instructions and financial affairs private and ensures that your instructions are carried out efficiently without unnecessary judicial involvement. 

2.         Pour-Over Will.

In this section you should place an unsigned copy of your Will with COPY stamped on each page.   It prevents a copy from passing as an original, yet lets your survivors know the contents of your Will and the witnesses to your Will.

Since you usually only keep one original Will, you should store the original Will in a very safe place such as a safe, vault, or safe-deposit box.  Again, make sure you tell people in writing where the original is kept. 

Upon your death, your Will leaves any property that was not transferred to your Revocable Living Trust before your death to your Revocable Living Trust.  Your Pour-Over Will functions as a safety net to ensure that the property owned in your individual name rather than in the name of your Revocable Living Trust at the time of your death is ultimately managed by your successor Trustees as provided in your Revocable Living Trust.  This is a second-best case scenario, though.  Your goal is to avoid probate altogether by transferring all your assets to your Revocable Living Trust during your life.  This Pour-Over Will is merely a backup document to ensure that your Revocable Living Trust ultimately controls all your assets. 

3.         Nominations.

You should create a document listing the names and contact information of each person appointed to act on your behalf in various capacities.  Include the names of those you have appointed as primary and successor trustees and executors under your Trust, Will, and your appointed holder of powers under your Power of Attorney, HIPAA Release, and Healthcare Directive. 

4.         Power of Attorney.

Include a copy of your Power of Attorney for financial affairs in this section.   In your Power of Attorney, you appoint an agent to act for you if you become incapacitated.  Your agent is authorized to transfer property to your Revocable Living Trust, to make withdrawals from your retirement assets, or to do anything else that you want your agent to do for you if you become incapacitated.

If you have not done so already, you should ask the first agent you have appointed if they are willing to accept this responsibility for you; if so, be sure they have either the original or a copy of this document to prove his or her authority to act.  If they do not have the original, you should let them know where the original is kept.  Alternatively, if you are concerned to keep it very private, you can just let them know where the document is without giving them a copy. 

5.         Privacy Affidavit.

Your Revocable Living Trust includes personal and financial information that you probably want to keep private.  Instead of providing financial institutions with a full copy of your Trust, and revealing this private information, many financial institutions allow you to use a document called a Trustee’s affidavit, a declaration of trust, or a certification of trust.  These are different names for the same document, which we generally call a privacy affidavit. 

The privacy affidavit contains only the provisions of the Trust that the financial institutions or others need to see. Financial institutions and others who deal with you will want proof that your Revocable Living Trust exists, that they are dealing with the true Trustee, and that your Revocable Living Trust gives your Trustee the power to do what your Trustee proposes to do.

If you do not have a privacy affidavit for your Trust, contact us and we can draft one for you.

6.         Trust Assets.

This section will contain documents that prove that your assets have been transferred to your Revocable Living Trust.  This section should contain a document for each asset you owned, proving that the Revocable Living Trust now holds title to that asset or that the Revocable Living Trust is named as the beneficiary.  This section should include the original or copies of:

• Real property deeds
• Stock certificates or indicia of ownership of a private company
• LLC / LP / Partnership agreements
• Buy-Sell agreement 
• Any documents confirming the transfer of your personal property to the trust. 
• Bank and brokerage account information and contacts / log in and password information.
• Credit card information
• Storage facility contract and key location
• Bank safe deposit box location and key location
• If you have a safe, the location and either the combination, or the location of the combination.
• Copies of title to all automobiles / boats  
• If you work with any financial advisors, especially if they have account privileges, you should include a document with their name, firm, and contact information.
• You may also want to draft an overview document explaining any nuances or things your successor needs to know to manage the asset. 

• Mortgage, Notes, and Other Receivables: If you have loaned money to anyone, you should assign your interest as lender to your Revocable Living Trust by a written document and notify your debtor of the assignment.  Put a copy of the loan documents and any assignments in this section.  

This is not an exhaustive list, but rather a guide to trigger thoughts about what you should include.

7.         Health Care

This section contains documents that relate to your medical care, including:

• HIPAA Releases: Any forms you have signed for release of Protected Health Information (HIPAA releases).  A HIPAA release allows the identified persons to obtain protected health information on your behalf to make informed decisions about your care and to pay your medical bills.
• Healthcare Power of Attorney:  Your Healthcare Power of Attorney authorizes your agent to make medical decisions for you if you cannot express your wishes or make the decisions yourself.  Your Healthcare Power of Attorney also authorizes your agent to obtain copies of your medical records. 
• Anatomical Gift Form:  You should include an Anatomical Gift Form consenting to the transfer of your organs after death to living persons who need them, or to research, if you have created one.
• Dementia Care Instructions:  This relatively new form provides instructions as to the particular type of care you would wish to have in the various stages of possible dementia or Alzheimer’s disease.

You may choose to include the originals or copies in this section, storing the originals elsewhere.

8.         Memorial Instructions.

When you die, your loved ones are often not able to think clearly.  Yet, some decisions must be made within hours of death.  This section allows you to provide your family and loved ones with important information about matters relating to your death.  Any guidance you provide will be appreciated. 

You may want to include your burial or cremation wishes and a description of the kind of memorial service you would like.  You may also want to express your feelings about the general amounts that should be spent for these remembrances.  If you have made pre-arrangements (pre-purchased plans), that information should be described, and relevant documents included in this section.

You should consider including religious affiliations, desire for private service or limited service for friends and relatives, pall bearers, viewing wishes (open or closed casket), scripture readings, music selections, etc. 

9.  Property Agreements. 

This section should include copies of any property agreements you have entered into with anyone with whom you co-own property (in your own name or indirectly through an entity).   

If it is not apparent from the agreements, you should include name and contact information for any co-owners.

10.        Personal Effects. 

Your Revocable Living Trust directs that your personal effects are to be distributed according to your wishes.  You can make your wishes known in writing during your life.  If you want to inform your Trustee of how you would like your personal effects distribution, you should create a list naming the property to be distributed and the name of whom it is to be distributed.  If you create a list, date and sign it on each page.  If you later update it, repeat the same procedure, destroying the earlier list. 

It is vital that you do not create conflicting instructions as to the same property. This is a common problem since over the years people forget what they promised to whom. Thus, be sure to check all past lists to make sure the instructions conform and if they do not, be sure to make sure your latest list wills supersede earlier instructions.

11.  Other Documents.

This is the final section.  It is the catch-all basket for documents that do not fit elsewhere.  This section should include:

• defined benefits plan (e.g., 401K / IRA) documents or account information. 
• copies of all insurance policies, particularly those with death benefits. 
• Bank accounts outside of the Trust and not listed elsewhere

You should include any letters that you have received concerning your assets.  You can include letters you have written to others.  This may be a personal letter to be delivered only upon death.  It may be a letter to your Trustee advising him or her how you would like matters handled.  This will help them interpret your Revocable Living Trust and other documents if they have any questions about your intent. It is likely your Trustee too will be grieving and unable to think clearly, so any insights you can provide will be useful, and appreciated.  

This is also a section where you can include important account and password information not provided elsewhere.  You should include your username and password to enable your trustee to:

• unlock your phone, computer, and other electronic devices
• access and turn of accounts with recurring payments (newspapers / Netflix / streaming music / etc.)  
• access online storage accounts, particularly photo storage
• access other accounts your Trustee will need to access.

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Storing Your Originals and Sharing Copies with Others.  Your Portfolio will include all documents that are important to your estate plan.  You can include originals, or you may want to keep the originals in another safe location and use copies of the originals in the portfolio.  If you do store your originals outside of the portfolio or share copies with others, list the location of the originals and the persons who have copies in a document in this section. 

Because your Estate Planning Portfolio will contain sensitive confidential information, it should be kept in a safe place, and not kept out in the open.  Wherever it is kept, though, it is critically important that the people who will need to find know where it is kept.  The plan is of no use if it is hidden.  As a fail-safe, you should consider secure online storage specifically designed for estate plans.  This is a secure online way to store your plan documents and share them electronically. Many brokerage companies (e.g., FidSafe from Fidelity) offer this as a benefit, and there are other companies that offer similar services for a fee. 

Conclusion: 

The tasks and organization described above are boring and necessary.  If you do not do it, your heirs, in the midst of turmoil, will have to do it without your wealth of background knowledge.  You went to the trouble of creating an appropriate estate plan: the last part of that task is to accomplish the organization described above.  Your family will appreciate it.