Updating Your Estate Planning Documents for a Digital World

April 27, 2022
Lindsay M. Schoeneberger

Several years ago, I wrote a blog article about the three estate planning documents every person should have.  Fast forward to today, and my recommendation has not changed.  Every person over the age of eighteen should have a Will, a Health Care Power of Attorney and Living Will, and a Financial Power of Attorney.

It is important to have all three documents because they each do different things and are effective at different times.  But how often do you really need to update them? And can’t the internet write most of these for you anyway? Let’s take a closer look.

1. The Will

Hands down, the most well-known of the three documents is the Will.  The Will controls what happens to your probate assets at your death.  A Will does not take effect until you die and can generally be revised at any time before your death so long as you have capacity.  A Will can also allow you to appoint a guardian of your minor children.

Wills can be very simple or maddingly complex.  It all depends on your goals and needs.

2. The Health Care Power of Attorney and Living Will

The Health Care Power of Attorney and Living Will have gained a lot of notoriety during the Covid pandemic. You may have even taken advantage of a program like Classroom Heroes, which provided free Living Wills and Powers of Attorney for local teachers.

But prior to the past two years, it was not uncommon for people to think that a Living Will was what your Will was called before your death.  It is actually a document where you detail your wishes in the event of an end-stage medical condition or permanent unconsciousness.

It is often paired with a Health Care Power of Attorney, which allows you to appoint someone to make medical decisions for you when you are unable to make them yourself.

3. The Financial Power of Attorney

The Financial Power of Attorney allows you to appoint an agent to access your financial accounts, pay bills, and make transfers on your behalf immediately upon signing.  When you appoint someone to act as your agent under a financial power of attorney, you are granting them a lot of power.

You should consider who you are appointing carefully.  If you would not trust your agent to hold a significant sum of cash for you, they are probably not the best person to appoint as your agent.

When to Review

Having all three documents is incredibly important, but making sure they stay up to date is just as important.  I generally tell my clients to review their estate planning documents every three to five years or any time there is a major life change.  Major life changings include someone in your life getting married or divorced.  A new baby is born, or someone dies.  You change careers or retire.  You sell your house.  You inherit additional assets, etc.

But why should you review them every few years?  Laws change.  The people in your life, your needs, or your goals change.  All of these changes can occur without it seeming like a major life change, even though they could mean important revisions for your estate documents.

The world can also change.

The way people do business changes rapidly, especially in the last two years.  As people shift to utilizing technology more than ever before, more assets are becoming solely digital.  These digital assets go beyond cryptocurrency.  Do you have a PayPal account?  An Apple cash card?  Those are digital assets.  Are all of your family photos stored in the cloud?  Do you only buy digital movies?  Those are also digital assets.

Do your documents allow your agent to access these assets?  If you haven’t reviewed your estate planning documents in a while, or you do not have any estate planning documents, it is time to reach out to an attorney.

Beware Online Drafting Tools

As a precautionary note, just because your assets may be digital, it does not mean your estate planning documents should be digital.

Estate planning documents are not one size fits all and are state-specific.  Using online tools to create a Will or Power of Attorney without consulting with an attorney may be tempting, but it can cause more harm than good.

It is important to meet with an attorney who regularly drafts estate planning documents and administers estates to be sure your estate plan will work for you. A good lawyer can explain the ramifications of the documents in your specific circumstances and save you or your family from many financial and legal headaches down the road.