Putting the finishing touches on an estate plan

See a checklist of what you may need to do—plus ways a financial advisor can help.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print

Key takeaways

  • Your estate plan is not complete until the titles and beneficiaries are set in accordance with your will.
  • If your estate plan includes a revocable living trust, you may need to title assets in the trust. This process is often called "funding the trust."
  • Financial advisors can play a key role in helping you fully understand the breadth of financial assets being held in various accounts and trusts—and to help make sure that financial assets are mapped to the overall financial plan.

Just because you completed your last will and testament and revocable living trust, does not mean the work on your estate plan is completely finished. In addition to having signed documents, you need to make sure all the beneficiary designations on your accounts and the titles of assets like real estate are set in accordance with your will.

Forget to take that last step and you may end up leaving assets inadvertently to an ex-spouse or former friend. Plus, you'll want to be sure your intentions are well communicated to your loved ones.

What to do? Here are tips and a checklist to help you make sure your estate plan can be carried out the way you planned.

Start by updating beneficiaries

"One of the biggest mistakes people make at the end stages of the estate planning process is not updating their beneficiaries," says Sander Bleustein, vice president, advanced planning at Fidelity Investments in Naples, Florida. "Many people are not aware that beneficiaries and titles supersede the will or trust, making this a critical step in determining what happens to your assets after you die."

A beneficiary is an individual who receives the benefit from an estate, trust, retirement account, life insurance policy, or account with a transfer on death (TOD) designation. This allows ownership of the account to be transferred to a designated beneficiary upon the owner's death.

Many times beneficiary designations are not set up properly, resulting in the distribution of those assets differently than intended. For example, your will or revocable trust may have provisions to leave your assets to an irrevocable trust for your heirs that gives you the ability to control the ultimate distribution of the assets upon your death. If the beneficiary designation on your accounts names the heirs directly, it would give them unfettered access to the assets immediately.

Remember, having beneficiaries designated on an account, such as a brokerage account, 401(k), or IRA, allows the account to pass outside probate, enabling your beneficiaries to avoid the time and expense of the probate process.

Tip: Some retirement plans may automatically designate your spouse as the beneficiary unless you name another beneficiary and your spouse has consented to the designation in writing. Check with your plan's governing documents to understand its beneficiary designation policy.

Read Viewpoints on Fidelity.com: 5 ways to protect what's yours

Fund trusts by retitling assets

There are many types of trusts to consider, each designed to help achieve a specific goal. An estate planning professional can help you determine which type (or types) of trusts are appropriate for you. A trust, whether revocable or irrevocable, is a legal arrangement for the transfer of property by a grantor to a trustee for the benefit of a beneficiary.

A critical element of estate planning, often overlooked, is that you, known as "the grantor," should transfer (retitle) certain assets to the trust. If your estate plan calls for converting your individual account into a trust account, that does not happen automatically. "We often work with clients to correctly title and register assets such as their investment accounts," says Bleustein.

For example, if your estate plan includes a revocable living trust, you need to title assets in the trust. This process is often called "funding the trust". The assets that typically are owned by a revocable trust can include:

  • Taxable brokerage accounts
  • Bank accounts and certificates of deposit
  • US savings bonds
  • Investment real estate
  • Second homes (in some states, attorneys advise the client to title their primary residence in their trust as well; it generally depends on probate, homestead provisions, and trust statutes, by state)
  • Business interests
  • Limited liability company (LLC) and partnership interests

If a trust is not properly funded, a will could be contested and the property could end up in probate, become a public matter, and possibly be distributed in a manner that is against your wishes. So if you decided to create a trust, make sure to work with a lawyer and financial advisor to get the titling of the assets and funding of the trust correctly implemented.

Tip: Read Viewpoints on Fidelity.com: Is a trust right for you?

Is it time to update your estate plan?

Many estate plans no longer meet their original intent due to inattention and a lack of routine updating. Death, birth, marriage, divorce, changing financial circumstances, and owning property in multiple states are some of the many reasons estate plans become outdated.

"As you update your estate plan, it's critical to get your beneficiaries right, correctly title or retitle your assets, and remember to fund a trust, if applicable," says Bleustein.

Next steps to consider

Start an estate plan

Get organized with Fidelity Estate Planner®.

Get the latest insights

Access articles, webinars, and ideas on wealth planning and investment strategies.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Print
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.

Your e-mail has been sent.

Sign up for Fidelity Viewpoints®

Get a weekly email of our pros' current thinking about financial markets, investing strategies, and personal finance.