Fall Back and Check Your Fallbacks
Time to check clocks, fiduciary appointments, and beneficiary designations.
Everyone appreciates an extra hour of sleep, right? Mark your calendars; daylight saving time ends on November 1. Especially considering the inevitable sugar crash after Halloween festivities, I welcome “fall back” and some additional snoozing. Just remember to change your clocks.
In addition to checking clocks, I hope you will also make a note to check your fallbacks, or back-up and successor appointees in your estate planning documents. Many of our clients created wills, trusts, and powers of attorney years and sometimes decades ago. Often a major life event motivated these planning documents: the birth of a child, the sale of a business, or a first meaningful accumulation of wealth. Life moves on, however, and these important documents do not update themselves. A plan that made perfect sense in 2010 may no longer reflect your family, your assets, or your wishes today.
As part of your regular financial checkup, we encourage you to revisit your core estate planning documents. While you are at it, check those beneficiary designations as well.
Fiduciary Appointments
Each of your key estate planning documents names one or more individuals (or institutions) to act on your behalf. Now is the time to ensure those appointments still make sense.
Executor (Personal Representative) Under Will
Your executor is responsible for guiding your estate through probate: gathering assets, paying debts, and distributing property according to your will. Ask yourself whether the person you named is still willing, able, and well-suited for this role. If your appointee has moved away or developed health issues, or if your relationship has changed due to the passage of time, consider an update.
Successor Trustees & Protectors or Powerholders
Successor trustees step in to manage trust administration and distribute trust assets when the initial or prior Trustee becomes incapacitated or passes away. In addition, Trust Protectors and Powerholders can be given varying powers and levels of responsibility under certain trust documents where named. Depending on the type of trust and its terms, these roles can involve years of ongoing administration, not just a single distribution event. Consider whether your named successor has the time, temperament, and financial acumen the job requires. Consider also potential conflicts (actual or perceived) resulting from a child-Trustee serving for his or her sibling or stepparent. Trustee appointments warrant regular review.
Agents (Attorney-in-Fact) Under Financial Power of Attorney
You should have complete trust and confidence that the person to whom you grant legal authority to manage your financial affairs — paying bills, managing investments, handling tax filings — will act in your best interest. Agency authority can be broad. Powers can take effect immediately upon signing or upon later incapacity, depending on how the document is drafted. If your named agents are no longer familiar with your financial situation and capable of fiduciary decision making, or if a child has maybe now aged into the role, consider an update.
Agent Under Healthcare Power of Attorney
Your Healthcare Power of Attorney appoints someone to make medical decisions on your behalf if you are unable to communicate your own wishes to providers. Confirm your named agent understands your wishes and is someone who can act decisively under emotional circumstances. Alongside a Healthcare Power of Attorney, many clients have a living will or advance directive expressing preferences about end-of-life care. Review and confirm these documents to ensure your agents have clear instructions and understand their discretion.
Guardians (If Applicable)
If you have minor children, your Last Will should designate a guardian. Family circumstances, geography, and relationships can shift substantially during the early years. These facts, and considering that the guardian appointment is one of the most time-sensitive, make it ever-important to periodically revisit and ensure guardian appointments match young parents’ wishes.
For each of these roles, we recommend confirming the following: is the appointee alive and well, willing to serve, and capable of serving? Have you named appropriate successors if your first choice cannot serve? Does the appointment still reflect your current relationships and priorities?
And While You Are at It… Beneficiary Designations and Survivorship Rights
Beneficiary designations on retirement, deposit and investment accounts can route assets around and outside of a testamentary estate plan, meaning that even a perfectly updated estate plan with the right fiduciaries in place can be undermined by an outdated beneficiary form. During your fall back review of fallback fiduciaries, we suggest reviewing designations. Take a look over the following:
Qualified/Retirement Accounts, such as 401(k)s, 403(b)s, Traditional and Roth IRAs, and similar accounts.
Taxable Investment Accounts and Deposit Accounts, especially joint ownership and instances of transfer-on-death (TOD) or payable-on-death (POD) elections.
Life insurance and annuity contract designations.
Common triggers for outdated designations include divorce or remarriage; the birth of a child or grandchild or those individuals attaining certain ages; the death of a previously named beneficiary; and changes in your intended distribution scheme (for example, wanting to add trust-based planning for a beneficiary rather than an outright distribution).
A Simple Next Step
At EQV Advisory, we are happy to help you review operative documents and designations, and coordinate with your estate planning counsel or asset custodians where updates are needed. A short conversation now can prevent significant complications and unintended outcomes and expense for your family in the future. We are here to assist with this important task.
Remember, fall back on November 1 and enjoy the extra hour!
— Larry Moye, JD
Chief Wealth Strategist
EQV Advisory
Disclaimer: This is for informational purposes only and is not legal or tax advice. You should consult with a qualified legal or tax professional regarding your specific situation. EQV Advisory is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about EQV's investment advisory services can be found in its Form ADV Part 2 and/or Form CRS, which are available upon request.