Your Estate Plan Is Signed. But Will It Actually Work?

I recently read a story about Malcolm-Jamal Warner that really stuck with me. Like a lot of people my age, I remember him as Theo from The Cosby Show. I loved that show as a kid, so I was sad to hear that he had died unexpectedly, and even sadder to learn that he left behind a wife and young daughter.

Now his widow has filed a lawsuit involving financial commitments she says were part of their premarital agreement. According to the lawsuit, those commitments included a $1 million life insurance policy, contributions to a retirement account, and annual payments to her. She alleges that some of those things never happened.

Obviously, I don't know everything that happened within their family, and these are allegations at this point. But if what is being alleged is true, as an estate planning attorney, I look at this as an example of an estate plan that failed.

And I don't necessarily mean that someone had the wrong legal documents.

What caught my attention was the possibility that important pieces of the plan simply weren't implemented.

I think there is something all of us can take away from that, because all of our estate plans are vulnerable in the same way.

Signing the Documents Isn't the End

When most people think about estate planning, they think about the documents. A will. Maybe a trust. Powers of attorney.

Those documents are obviously important. But having the documents doesn't necessarily mean everything is going to work the way you think it will.

Take life insurance as an example. If life insurance is part of how you plan to protect your family, you actually have to get the policy. The right beneficiaries need to be named. The policy needs to stay in place. And it needs to make sense with everything else you've done in your estate plan.

A trust is another good example. You can create and sign a perfectly good trust, but there may still be work to do afterward. Depending on your plan and your assets, accounts may need to be retitled, beneficiary designations may need to be changed, or other steps may need to be taken so that your assets actually work with the trust you created.

That's where I think people can get into trouble. They understandably assume that once the documents are signed, they're done.

Sometimes they're not.

Your Will May Not Control Some of Your Biggest Assets

This is something that surprises a lot of people.

Retirement accounts and life insurance generally have beneficiary designations. Some bank and investment accounts can have them too. Those assets may pass according to the beneficiary designation rather than according to what your will says.

And think about when you filled those forms out.

Maybe it was when you started a job 10 or 15 years ago. Maybe it was before you were married. Maybe your children weren't born yet. Maybe someone you named has died, or maybe that person simply isn't who you would choose today.

It's very easy to forget about these things because they're usually sitting somewhere in the background of our financial lives.

But they're part of your estate plan too.

That's why, when I'm helping a family plan, I don't want to look only at the legal documents. I want to understand what you own, how you own it, who you've named as beneficiaries, what insurance you have, and what you're actually trying to accomplish for the people you love.

All of those pieces need to work together.

The Problem With “Sign It and Forget It” Estate Planning

I sometimes call traditional document-based planning “sign it and forget it” estate planning.

You meet with an attorney, sign a stack of documents, put them in a binder on a shelf, and feel relieved that you finally got your estate plan done.

DIY estate planning can create a similar problem. You may have perfectly valid documents, but who's looking at the whole picture?

Who's helping you think through whether those documents actually make sense for your particular family? Who's looking at your assets and beneficiary designations? Who's helping make sure the things that need to happen after you sign actually happen?

For me, that's a huge part of the value of working with an estate planning attorney.

I don't see my job as simply preparing documents and sending you on your way.

My job is to counsel you so we can create a plan that makes sense for your unique family. It's to help coordinate the different pieces of that plan and help with the follow-through. And, when appropriate, it's to work with your financial advisor, accountant, insurance professional, or other advisors so we're not all working in separate silos.

Because your legal documents are only one part of your financial life.

Your Plan Also Has to Keep Up With You

Even if you did everything right when you created your estate plan, there's another issue: life changes.

Your children grow up. You buy or sell a house. You change jobs. Your finances change. You start a business. You get married or divorced. You welcome grandchildren. Someone you named in your documents may die or may no longer be the person you would choose today.

And sometimes your priorities simply change.

Your estate plan doesn't automatically change when your life does.

That's why I don't think estate planning should be a one-time transaction. I want to stay connected with my clients and revisit their planning as their lives change.

A plan that worked beautifully for you ten years ago may not be the plan your family needs today.

So, Would Your Plan Actually Work?

That's really what the Malcolm-Jamal Warner story made me think about.

Not what he should have done differently. I don't know enough about his family's circumstances to make that judgment.

It made me think about the rest of us.

We can have the best intentions. We can sign all the right documents. We can tell our spouses what we want to happen.

But at the end of the day, the question that matters is whether we've actually put a plan in place that will work when the people we love need it.

So here's the question I would encourage you to ask yourself:

If something happened to me tomorrow, am I confident my estate plan would actually work the way I think it would?

If you're not sure, that's worth finding out now.

My goal at Evergreen Estate Planning is to help families create plans that don't just look good on paper. I want to help you create a plan that makes sense for your family, coordinate the pieces, follow through on the details, and keep that plan working as your life changes.

Because you're not doing any of this for the documents in the binder.

You're doing it for the people you love.