Estate Planning – Next Steps, Part 1

Congratulations! You have executed your Will, Statutory Power of Attorney, Medical Power of Attorney (with HIPAA Authorization) and Directive to Physicians. Your estate planning documents are complete, but you have more to do. In this first article, we will discuss what other documents need to be updated to make sure your estate planning is complete.

First, you need to fill out an Advance Designation with the Social Security Administration. This Advance Designation allows you to choose up to 3 possible representative payees in case you are unable to manage your finances. The designated payee can receive your Social Security benefits and use them to pay your expenses. When the SSA thinks you need help managing your benefits, they will contact your designated payee. Of course, they are not obligated to use any of your designations, but at least you will have given them choices. Before you can make this designation, you will have to create an account with the Social Security Administration. Here is the website to set up your account: https://secure.ssa.gov/adrp/adrp-internet/ Once the account is set up, you can fill out the Advance Designation. You can also set this up when you apply for benefits.

Second, you need to review your life insurance policy. Your will does not control who will receive your life insurance benefits. When you first purchased the policy, you named the beneficiaries, usually a primary and a secondary. Now is the time to review these names to make sure they are consistent with your current wishes. For most married couples, the spouse is the primary beneficiary, and children are the secondary beneficiaries. If you create a trust in your will for your minor children, you want to name that trust as the secondary beneficiary instead of the children. Typically, life insurance companies will not pay proceeds to a minor.

Third, you need to review your retirement accounts. When you initially set up each retirement account, you named a primary beneficiary and an alternate. These beneficiary designations now need to be reviewed to ensure they are consistent with your current wishes. As with life insurance policies, for married couples, the spouse is usually the primary beneficiary, and the children are alternates. Again, if you create a trust in your will for your minor children, you may want to name that trust as the alternate beneficiary instead of the children.

In 2019, Congress changed some of the rules regarding IRAs, so it is important to first contact your accountant to determine the tax consequences of naming a trust as a beneficiary of your retirement accounts.