Do You Have a Blind Spot? Contributed by: Marie T. Chin, Asset Alignment Coordinator
We are passionate about creating estate plans that work. You might think that having an estate plan that works requires a relationship with an estate planning firm, or a stack of thorough and up to date estate planning documents, and although that’s all true, what is equally if not more important is maintaining accurate financial records of assets with your estate planning firm.
When we introduce this coaching, we often hear feedback to the tune of, ‘I already have a financial advisor.’ We completely understand, and assure clients that we have no qualifications to make suggestions about how to grow your money. We are so thankful to those professionals who cover that very necessary aspect of a client’s overall plan. But it’s still important that your estate planning attorney have a complete snapshot of your assets, and that the records stay up to date. Let me explain.
Put simply, your assets are anything that has monetary value. This can include traditional accounts like checking and savings, life insurance policies, or business interests. We all have them – homes, cars, investments, retirement accounts, lawnmowers. Knowing your assets is important not only to the estate planning process, but also for everyday life. You need to know what you have in order to understand what you can afford, to make future plans, and to calculate some of life’s decisions. This probably all seems obvious, but it is so common for clients to sit across our conference room table and not know information about all their assets.
One common example of a forgotten asset is life insurance. Many people have smaller life insurance policies received through work or different organizations they may be a part of, and that they have owned for a long time. No maintenance, like monthly premium payments, are required on the account, so it’s easily forgotten. These companies change ownership more often than you would think, and if clients haven’t kept track of the policy then they can have a pretty difficult time trying to not only track down the details, but to also track down any necessary Change of Ownership or Change of Beneficiary forms.
It’s easy to imagine so many factors that would prevent a person from having information about an owned asset; a marriage where only one spouse manages the finances; a decline in health; poor record keeping; assets that require no maintenance or annual involvement; an unknown change in corporate ownership of an account, or in employees that manage an account. These examples describe happenings with traditional assets. Imagine how much harder it can be to find digital assets like music downloads or electronic picture storage without routine maintenance of those accounts and good record keeping.
By now you might be wondering about the bigger point of this conversation. If an estate planning attorney doesn’t know about a client’s asset, then they cannot provide the very best advice for how that asset is sheltered during the client’s lifetime and/or distributed at the client’s passing. The practitioner becomes limited in helping the client create an estate plan that works.
Keeping track of your assets can be as simple as keeping a running list of all assets and where they are held, or as complex as tracking all account numbers and up to date value information with current statements. Many clients choose to accomplish this tracking with their Financial Advisor or Accountant. It’s also important to track requested changes. If one of your trusted professionals recommends a change, for example, retitling an account, it’s important to follow up with the company afterwards for verification.
Having access to thorough asset information can be a blind spot for many clients. Keeping an up to date list of what you have doesn’t take much time to create, even less time to maintain, and is extremely helpful in making sure that your estate plan works as you intend for it to.