By D. Scott Bloom, CFP®
The goal of this article is for readers to consider their own circumstances to validate the need to conduct annual hypothetical “scenario testing” simulations on their existing estate planning documents. In other words, see the need and benefit to review your documents for updates annually, at best, every 3-5 years at least. Three practical analogies are presented to reinforce the necessity and benefits of stress-testing the reader’s estate planning intentions in comparison to their aging documents, namely to their revocable living trust, powers of attorney and advanced healthcare directive documents. Keep in mind, updates and changes to any documents should be completed by a competent attorney/ firm licensed in your state of residence and preferably one who specializes in estate planning and trusts.
The goal of this article is for readers to consider their own circumstances to validate the need to conduct annual hypothetical “scenario testing” simulations on their existing estate planning documents. In other words, see the need and benefit to review your documents for updates annually, at best, every 3-5 years at least. Three practical analogies are presented to reinforce the necessity and benefits of stress-testing the reader’s estate planning intentions in comparison to their aging documents, namely to their revocable living trust, powers of attorney and advanced healthcare directive documents. Keep in mind, updates and changes to any documents should be completed by a competent attorney/ firm licensed in your state of residence and preferably one who specializes in estate planning and trusts.
The Paradox
The important subject of estate planning may be viewed as a paradox:
On one hand, estate planning is a necessary process for the orderly and efficient control, management and transfer of an individual’s assets and estate. More bluntly, it’s what responsible and successful people do as a means of helping their families and successors avoid the perils of probate and a host of costly, administrative nuisances that come with disorganized estates.
On the other hand, estate planning is often considered a complicated, intimidating legal matter that often evokes negative, yet subtle emotional responses having to do with considering our own imminent demise and how that unavoidable event ties into the subject of our finances. More bluntly, the idea of spending thousands of dollars, answering questions in an attorney’s office and discussing our future death (possibly with our spouse), is cringeworthy.
Astute advisors and attorneys are generally insistent that clients review and update their estate planning documents periodically. Client’s generally postpone doing so and they procrastinate. This is understandable human behavior that we can acknowledge and overcome when we consider the following 3 analogies and their merits.
Architecture & Construction
Your estate plan is a set of blueprints for the future construction of a structure (house, building, museum). The blueprints of this structure represent the vision of your legacy. The estate plan documents you’ve signed and notarized are static, time stamped and dated- figuratively etched in stone and snapped into a 3-ring binder. These blueprints get printed, saved as .pdf files and or uploaded into the cloud. The architectural blueprints for any construction project are similarly dated, printed and timestamped. Accordingly, these documents age with time.
The risk and dilemma: Over time, as zoning laws change, construction standards improve and building materials evolve and modernize, the architect’s blueprints remain rolled up and stored in cylindrical cardboard tubes. Many times, there are unforeseen delays. When it’s finally time to break ground on construction, (ie: the triggering event being your incapacity or death), the outdated plans can’t be carried out according to legal codes, industry standards and available construction materials.
Hollywood Movie
Your estate plan is a screenplay, the script for an Oscar winning film. The screenplay involves the producers and scriptwriters (you & your spouse), a director (successor trustee), a movie set (state law), the cast of actors and audience (your beneficiaries). Your script is composed of scenes and acts, literal future actions that you’ve imagined and dictated for the director to interpret, both literally and with a certain amount of creative subjectivity. You’ve included a happy ending where the actors ride off into the sunset, happily ever after.
The risks and dilemmas: When filming is set to begin (ie: the triggering event being your incapacity or death) the award winning director is no longer the Hollywood favorite, they’ve retired, slowed down or they’re otherwise no longer your best choice to do the job. Meanwhile, the movie set you had in mind is no longer suitable due to state laws, the studio moved operations or this type of filming is done digitally. The young actors you had in mind have aged (minors beneficiaries reaching adulthood) or circumstances changed (married, divorced, remarried with step-children, etc)
Autobiography
Your estate plan literally begins with an autobiography, a self-written account of your life. At the date of publishing it is entirely historical. By definition, there is no “ending” yet. This is where non-fiction turns into science fiction, the best-case scenario and predictive foretelling of your future intentions. With estate planning, you write your own ending- AND THE SEQUEL- to your life story. Similarly to an actual autobiography that you have published during your lifetime, your estate plan documents are dated- and they will age with time. Accordingly with an autobiography and your estate plan documents, you may want (or need) to reprint a revised edition. This is for the benefit of your reader and, in this example, for your heirs.
The risk and dilemma: Leaving to chance how the original edition of your life’s story is interpreted by successor trustees, third parties and the courts has negative consequences that can outlive our own life expectancies by years. As long as we are still living and have the capacity to do so, we should ensure that our “happy ending” is realized by our loved ones.
Regularly reviewing and updating your estate planning documents ensures they remain aligned with your intentions, responsive to changing circumstances, and compliant with evolving laws. By adopting a proactive approach—such as annual or periodic “scenario testing”—you can prevent outdated plans from causing unintended consequences. The solution is simple: treat your estate plan as a living document, evolving with you, and review it with qualified professionals to secure your legacy and provide clarity and peace of mind for your loved ones.
-D. Scott Bloom, CFP®
The important subject of estate planning may be viewed as a paradox:
On one hand, estate planning is a necessary process for the orderly and efficient control, management and transfer of an individual’s assets and estate. More bluntly, it’s what responsible and successful people do as a means of helping their families and successors avoid the perils of probate and a host of costly, administrative nuisances that come with disorganized estates.
On the other hand, estate planning is often considered a complicated, intimidating legal matter that often evokes negative, yet subtle emotional responses having to do with considering our own imminent demise and how that unavoidable event ties into the subject of our finances. More bluntly, the idea of spending thousands of dollars, answering questions in an attorney’s office and discussing our future death (possibly with our spouse), is cringeworthy.
Astute advisors and attorneys are generally insistent that clients review and update their estate planning documents periodically. Client’s generally postpone doing so and they procrastinate. This is understandable human behavior that we can acknowledge and overcome when we consider the following 3 analogies and their merits.
Architecture & Construction
Your estate plan is a set of blueprints for the future construction of a structure (house, building, museum). The blueprints of this structure represent the vision of your legacy. The estate plan documents you’ve signed and notarized are static, time stamped and dated- figuratively etched in stone and snapped into a 3-ring binder. These blueprints get printed, saved as .pdf files and or uploaded into the cloud. The architectural blueprints for any construction project are similarly dated, printed and timestamped. Accordingly, these documents age with time.
The risk and dilemma: Over time, as zoning laws change, construction standards improve and building materials evolve and modernize, the architect’s blueprints remain rolled up and stored in cylindrical cardboard tubes. Many times, there are unforeseen delays. When it’s finally time to break ground on construction, (ie: the triggering event being your incapacity or death), the outdated plans can’t be carried out according to legal codes, industry standards and available construction materials.
Hollywood Movie
Your estate plan is a screenplay, the script for an Oscar winning film. The screenplay involves the producers and scriptwriters (you & your spouse), a director (successor trustee), a movie set (state law), the cast of actors and audience (your beneficiaries). Your script is composed of scenes and acts, literal future actions that you’ve imagined and dictated for the director to interpret, both literally and with a certain amount of creative subjectivity. You’ve included a happy ending where the actors ride off into the sunset, happily ever after.
The risks and dilemmas: When filming is set to begin (ie: the triggering event being your incapacity or death) the award winning director is no longer the Hollywood favorite, they’ve retired, slowed down or they’re otherwise no longer your best choice to do the job. Meanwhile, the movie set you had in mind is no longer suitable due to state laws, the studio moved operations or this type of filming is done digitally. The young actors you had in mind have aged (minors beneficiaries reaching adulthood) or circumstances changed (married, divorced, remarried with step-children, etc)
Autobiography
Your estate plan literally begins with an autobiography, a self-written account of your life. At the date of publishing it is entirely historical. By definition, there is no “ending” yet. This is where non-fiction turns into science fiction, the best-case scenario and predictive foretelling of your future intentions. With estate planning, you write your own ending- AND THE SEQUEL- to your life story. Similarly to an actual autobiography that you have published during your lifetime, your estate plan documents are dated- and they will age with time. Accordingly with an autobiography and your estate plan documents, you may want (or need) to reprint a revised edition. This is for the benefit of your reader and, in this example, for your heirs.
The risk and dilemma: Leaving to chance how the original edition of your life’s story is interpreted by successor trustees, third parties and the courts has negative consequences that can outlive our own life expectancies by years. As long as we are still living and have the capacity to do so, we should ensure that our “happy ending” is realized by our loved ones.
Regularly reviewing and updating your estate planning documents ensures they remain aligned with your intentions, responsive to changing circumstances, and compliant with evolving laws. By adopting a proactive approach—such as annual or periodic “scenario testing”—you can prevent outdated plans from causing unintended consequences. The solution is simple: treat your estate plan as a living document, evolving with you, and review it with qualified professionals to secure your legacy and provide clarity and peace of mind for your loved ones.
-D. Scott Bloom, CFP®
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