August’s Financial To-Dos

August’s Financial To-Dos

Each month, we offer suggestions for ways to chip away at your financial goals. The idea is that doing at least one thing each month, you can make significant progress.

This month, consider focusing your attention on a necessary but often neglected aspect of any plan: what to do when things go wrong.

Review and update your estate plan

If it’s been awhile since your wills and/or trusts have been updated — or if you are in the 56% of Americans who have yet to create a will — now is a great time to review your estate plan.

If “estate plan” feels too big, then set a goal this month of merely reaching out to an estate planning attorney to set an appointment.

Your estate plan outlines what will happen to your assets and dependents if you die or are no longer able to handle your own affairs. A typical plan includes Wills, Trusts, and Powers of Attorney.

Your estate plan should be reviewed every three years. Much can happen over 36 months. Your updates may reflect changes in who you’ve nominated to care for you, your belongings, or your children; significant increases or decreases in what you own; or a number of other items. Even if you’d like to keep all of these elements the same, there have likely been changes in estate tax law that call for a plan update. A lawyer recently pointed out to me that the estate tax laws have changed 15 times in the last 14 years.

Clients often ask me if they need an attorney or can get away with using online services, like legalzoom.com. I typically discourage using these. A good lawyer is much like a good architect: you can reduce costs by going without, but the penalty paid down the road may be significant.

Confirm beneficiaries on accounts and insurance policies

Retirement accounts and life insurance policies are typically passed on to heirs directly by naming them as beneficiaries on the account or policy.

A common mistake is forgetting to update these — or failing to name them in the first place. Accounts such as IRAs and Roth IRAs are handled through a custodian and can often be managed online. Workplace retirement plans may need to be updated through an HR department. Don’t forget to list beneficiaries for group life insurance benefits many employers offer, even if the value is relatively low!

Create a “digital asset” plan

Unless your will was created recently, it probably does not include some of your most important assets: your digital accounts.

Though online services like Facebook, Instagram, and Gmail may not have much financial value, they usually hold high emotional value. Without access, your loved ones may lose all the pictures, music, or messages associated with your accounts when you die. Unfortunately, the states are still working through a unified way attorneys should handle these new “assets.”

In the meantime, there are some things you can do to beef up your digital asset plan:

  • Keep a secure, master list that a trusted person can find, listing all your accounts and passwords. It’s generally better to keep this as a physical print-out in a personal documents safe (rather than in a digital format that can be hacked).
  • Appoint a Facebook “Legacy Contactto manage your Facebook data after you have died (including downloading photos).
  • Set up a Google Inactive Account Manager to make sure someone trusted has access to accounts such as Gmail, Youtube, Google Docs or Photos.

Like all financial goals, you don’t have to tackle this alone. We’d love to help you with any or all of these at your next quarterly client meeting, and we’d also love to connect you with like-minded estate planning attorneys that can help you craft a plan.

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