Each retirement account provider and life insurance company has its own beneficiary designation forms, which should be reviewed and, if appropriate, updated. The downturn in the market can actually be an opportunity to leverage lowered market values by, for example, making gifts of securities or converting traditional IRAs to Roth IRAs.
Everyone should have these essential documents in place:
- Health care proxy (i) authorizes your agent to make medical decisions for you, if you are incapacitated and cannot make the decisions for yourself, and (ii) provides guidance as to how those decisions should be made.
- Durable power of attorney authorizes your attorney-in-fact to make financial decisions for you, including paying your bills and managing your investments and business, and implementing your estate plan.
- Last will and testament designates a personal representative to gather your assets at your death, pay your debts, taxes, and administration expenses, and then distribute your remaining assets to your chosen loved ones. If you have minor children, you should appoint a guardian in your Will to care for them.
- Revocable trust allows clients to keep their affairs private and avoid the cost and delay of a probate proceeding. You can appoint a trustee to administer your assets on your behalf during incapacity, and to wind up your affairs and manage the trust assets for the benefit of your chosen loved ones upon your death.
- Funeral instructions are helpful if you have strong feelings about your funeral and you want to appoint an agent to make sure they are carried out.
- Beneficiary designation forms for your retirement accounts and life insurance will override your Will or Trust agreement! You should review your beneficiary designations to ensure the appropriate beneficiaries are designated. As a general matter, it is not a good idea to pay life insurance or retirement assets to an estate, so it is important to put in place appropriate successors if your primary beneficiaries are not available.