I often receive the question towards the end of an estate planning engagement about who (if anyone) the client should provide copies of their living trust and related documents to, as well as best practices with document storage, etc.
This is a very important question. After all, if your legal documents and other important records are not readily available when they're needed (meaning death or incapacity), then your successor trustees and beneficiaries are without the tools they need.
Here are 4 simple and practical tips to lay a proper foundation for future accessibility and use of your living trust based estate plan:
1: Let Your Successors Know where You Keep Your Original Documents
At a minimum, your successors (trustees, guardians, health care agents, etc) should know where you keep your original documents. The original documents will always be considered the gold standard, as they are readily accepted by any financial institution, court of law, or other third party.
Decide upon a designated location to store your signed original documents along with any related information (discussed below in point 3) that will help with transitioning control down the line. Possible locations to store your documents may include a filing cabinet or drawer, or in a designated place on a shelf. Keeping documents off the floor is advisable as they will be less susceptible to damage of any kind. If you decide to store your documents inside of a safe, be sure that your successors are able to easily gain access to it.
2: Consider Providing Your Successors with Their Own Copy (Electronic or Physical)
In addition to notifying your successors as to the location of your signed original documents, consider providing them with a copy of their own. This can be provided in the form of a physical copy, an electronic copy, or both.
Copies are nearly as good as the original signed documents for most purposes. Therefore, by providing your successors with a copy, they will have immediate to those documents in the event of an emergency. For instance, if you are hospitalized, they will already have a copy of your advance health care directive and power of attorney documents to act as an agent on your behalf. When you pass away, they will have a copy of your trust and will to assist with transitioning your assets, as well as the care and custody of any minor children.
When it comes to electronic copies, providing your successors with a copy to store on their device(s) is a great start. In addition, encourage them to also be stored separately on a flash drive, cd, external hard drive, and/or through a third party service (such as FidSafe of LastPass) that allows you to designate a person to receive your digital files upon your passing.
3: Include Related Information
In addition to the core estate planning documents, consider including related, practical information that will help your successors down the line. This includes details such as contact information for all of the individuals who should be notified in the event of your passing. These individuals would include your estate planning attorney, financial, insurance and tax advisors, as well as all of the individuals named in your estate planning documents.
I also strongly encourage that you maintain with your estate planning documents a current list of all assets, as well as any account numbers (or at least the last 4). This can be in the form of account statements, a spreadsheet, or any other method that is convenient for you. Lastly, include information pertaining to any vehicles or other significant tangible personal property, as well as information pertaining to any loans, and all insurance policies.
4: Keep it Current
It’s important to review and update these records annually. Here’s how:
Put a recurring date on your calendar and go through all of your records noted above, making sure that details such as successor trustees, guardians, health care agents, and your plan of distribution all still make good sense for you. If you need to make any changes to your planning documents, then let your estate planning attorney know. If you do make amendments to your documents, be sure and provide any individuals you have given copies of these documents to an updated copy of the documents you have amended.
Next, make sure the related information noted in item 3 above is all accounted for and current.
Finally, regardless of whether or not anything has been updated, schedule a brief annual check in with your successors. It's good to remind these individuals that they have a role in your estate plan, because they will ultimately be called upon to assist your loved ones. Remind your successors of the location of your physical documents, review how they are storing any copies you may have provided them, and ensure that they have current information.
Taking these simple but practical steps will greatly enhance the efficacy and smooth administration of your affairs, as well as provide you with the peace of mind knowing that things are current and in order.