Always Have a Backup: Planning for Contingencies In Your Estate Plan

If you have a backup of your hard drive or a portable generator for emergencies, you know the value of a backup. Most of the time, Plan A works just fine. However, sometimes Plan A fails, and when that happens, a backup is important.

In your estate plan, this same thing is true. I recommend to my clients that they have at least one backup person for each of the following roles:

  • Personal representative of your estate
  • Trustee, if a trust is part of your estate plan
  • Attorney-in-fact for health care and financial decisions

In most estate plans, a person is named in each of these roles. As time rolls on, things change. Consider, for example, let’s say that you’re married and you name your spouse to serve in these roles without any backups. Decades later, your spouse dies, and you never update your documents. Who’s taking care of you if you become disabled? Who’s handling your estate? A decision will be made, but wouldn’t you rather make that decision?

And that’s where the backups come in. Your named backups can step in and take over if the initial nominee can’t do the job. You can change who you’ve nominated or switch the order of the backups as time goes on as well; as long as you have the ability to make and communicate those decisions, you can adjust your plan.

One other thing about backups…

I’ve talked before about how accounts that have beneficiaries generally avoid going through probate. One of the reasons I say “generally” is that if you don’t name beneficiaries, or if you outlive your beneficiaries, the account will most likely go to your estate, and that means the probate process. You can check your beneficiaries with your account provider–often any backups will be labeled “contingent” or “secondary” beneficiaries. Naming backups to these accounts is easy–you don’t even need a lawyer to do it.

Estate planning is important, and you want your plan to succeed. One of the ways you can ensure that is to have backups ready for every role in your estate plan.

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