Many people think that their planning is done and their estate plan is complete once they have signed their documents. However, simply signing your documents is not enough. There are additional steps that, although it may not appear so, are equally as important in creating an effective estate plan. The following are three steps that are necessary in creating an effective estate plan. The first one is obvious but we find that many people neglect to do the last two steps and fail to accomplish their intended estate plan.
STEP 1 – Sign Your Documents
You sat down with your attorney and explained your estate planning goals. He or she drafted your documents and you have reviewed them. Now you make an appointment to go to the attorney’s office and sign, or execute, your documents. Your documents should include an Advance Directive for Health Care, a Durable Power of Attorney, and a Last Will & Testament or a Revocable Living Trust. Once the documents are properly signed and witnessed your Attorney will likely give you the originals to take home with you at the conclusion of your meeting. Many people stop here because they think the process is complete. But, there are two more very important steps.
STEP 2 – Store Your Documents in a Safe Place
It is very important that you store the original documents in a place that you will always remember and where they will be safe from theft or destruction . A safe deposit box is a popular place to store these originals. While a safe-deposit box is certainly a secure place to store these documents, it may also be very difficult for a friend or family member to gain access to the safe deposit box to retrieve the originals. A fire-proof safe or file cabinet in the home are also popular places to store these documents. These can typically be accessed more easily than a safe-deposit box but can still be difficult for your survivors to gain access to. If you don’t have a safe deposit box or a fire-proof safe, then keep these documents organized and labeled wherever you keep your other important documents. This could be in a specific file-folder or a specific drawer or cabinet at home.
STEP 3 – Communicate With Your Loved Ones
This step is extremely important and is easily the most commonly ignored. You can have the most thorough and well-prepared documents possible and have them stored in the absolute safest place, but if no one knows where your documents are or what to do with them then there is a great chance your estate plan will not be carried out according to your wishes. You should tell your Executor(s) under the Will and Agent(s) under the Powers of Attorney about their appointment. Explain what their role in your estate plan will be and any expectations or instructions that you have for them. Explain what they need to do, when they need to do it, and why they need to do it. Explain where they can find your estate planning documents and how they can gain access to them if they are in a secure storage space like a safe-deposit box or safe. If your documents are in a safe at home make sure your Executor has the keys and/or combination to the safe. If your documents are in a safe-deposit box ask your banker what they will require to permit your Executor to retrieve the original Will. This typically requires that your Executor be added as a signatory on the safe deposit box and also that he or she has a key. Also make sure they have the contact information for anyone they may need to speak with during the process, including, potentially, the attorney that drafted the documents for you. It is also a good idea to communicate with your beneficiaries about what they are to receive under your estate and, if necessary, why you chose this distribution. Talking through this with your family before your death may be difficult but will help clarify your wishes and avoid confusion (and potential legal disputes) later.
