Keeping a plan current

A cadence that survives contact with real life

Advice to "review your estate plan regularly" fails because it has no trigger and no scope. Nothing in ordinary life prompts it and nobody knows what reviewing means, so it does not happen. Two concrete habits work better than one vague one.

Annually, check only the beneficiary designations. That is a twenty-minute job across a handful of accounts, and it is the one that matters most: on a retirement plan the fiduciary must follow the plan documents, so the form on file decides who receives the money regardless of what the will says.^{Source 1}

Every three to five years, or after any life event, look at the whole set — the will, the powers of attorney, the health care directive, the named executor and agents, and whether the people you named are still alive, still willing and still the right choice.

Attach the annual check to something that already happens. The week the tax paperwork comes out is the usual answer, because the statements you need are already on the table.

The events that should start a review

Marriage. Divorce or the start of divorce proceedings. A birth or an adoption. A death — especially of a named executor, agent, guardian or beneficiary. A move to another state. A new job, which usually means a new retirement plan with a blank beneficiary form. Buying or selling a home. A serious diagnosis, yours or your spouse's. And any change in who you would actually want to decide things.

A new job is the most commonly missed of these. The new plan starts with no beneficiary on file, the enrollment paperwork treats it as optional, and the default that applies when nobody is named is decided by the plan document rather than by the will.^{Source 1}

Federal plans are their own category and are unforgiving. A Thrift Savings Plan beneficiary cannot be named or changed by a will at all — only a designation on file with the record keeper works — and a separation is not a divorce: a separated husband or wife is still the spouse until a decree of divorce or annulment has been entered.^{Source 2Source 3}

What divorce does automatically, and what it does not

This is where the confident assumption does the most damage. People believe divorce cleans up their documents, and it partly does, unevenly, and differently for each kind of document and in each state.

The pattern worth carrying is this: a will is often adjusted by law, a beneficiary designation on a federal plan usually is not, and a health care directive follows its own rule with its own timing. Pennsylvania revokes a spouse's appointment as health care agent at the moment a divorce action is FILED — not when it concludes — while a will elsewhere may not be touched until the decree.^{Source 6}

Do not rely on any of it. Automatic revocation is a safety net for people who died before they got round to it, not a substitute for signing new documents. The gap between filing and decree is exactly the period in which a health emergency is most likely to be handled by somebody you are in the middle of divorcing.

Telling people, without handing over the documents

A plan nobody knows about fails in a specific and avoidable way: not because the documents are wrong, but because nobody looks for them, or the person named as executor learns of it at the worst possible moment, or two siblings discover a decision at the same time as they discover the death.

You do not have to disclose the contents. Four things are enough, and they are the four a family cannot reconstruct: that a plan exists, where the documents are, who is named to do what, and — where it matters — why. The last one is worth more than it looks. A decision that looks arbitrary from outside usually had a reason, and the reason travels much better while you are alive to give it.

Tell the named people specifically, and tell them they are named. An executor who has never been asked is a common and entirely preventable problem; so is a health care agent who finds out in a corridor.

Amounts are the part people are right to withhold. Roles and locations are the part they are wrong to. Almost every family argument Sahvelo has read about turns on somebody being surprised, not on somebody being poor.