Estate Planning / The Compound Effect
Your Estate Plan Is Probably Outdated (Or Missing Entirely)
| 8 min | By Heath J. Harris
Most people either don't have an estate plan or are relying on one that hasn't been touched in years. Here's what a good plan includes and when to update it.
Estate planning is one of those things everyone agrees is important -- but few people actually keep updated. It gets filed away, mentally and literally, as a "set it and forget it" task. Until something goes wrong.
Here is the reality we see at Compound Advisory, working with clients from our Annapolis, Maryland base and virtually across the country: most people either do not have an estate plan, or they are relying on one that has not been touched in years. Even among successful business owners, retirees, and high-net-worth families, the documents are often buried in a filing cabinet, missing key components, or dangerously outdated.
Let us look at a hypothetical example of what that can look like -- and how to avoid it.
Rick's 2006 Estate Plan: A Cautionary Illustration
Consider a hypothetical scenario: Rick was a real estate investor who built a multi-property portfolio and exited in his early 60s with a solid net worth and a paid-off home. He was sharp, proactive, and financially independent. But like many people, he figured his old estate plan would do the job.
It did not. When Rick passed away unexpectedly, his family discovered:
- His healthcare proxy still named his ex-wife
- His trust beneficiaries were listed as minors -- they were now adults with families of their own
- His will had not been updated in 15 years
- None of his recent real estate acquisitions were titled in the trust
The result: delays, legal fees, family arguments, and a mess that took years to untangle. Rick did not mean to leave chaos behind. But by not updating his estate plan, he unintentionally did exactly that.
Why This Happens So Often
Estate planning is not top-of-mind until it has to be. It is easy to push to the bottom of the to-do list because it feels complicated, you assume you "already did it," and no one is asking about it -- until it is too late.
But an outdated or incomplete plan can cause massive problems: probate delays, misdirected assets, unintended beneficiaries, tax inefficiencies, and family conflict that can last for years.
When to Update Your Estate Plan
You do not need to update your estate plan every year. But you do need to review it regularly and update it after major life or financial changes:
- After selling a business -- The asset structure and tax implications change dramatically
- When you move to a different state -- Estate laws vary significantly; what works in Maryland may not work in your new state
- After marriage or divorce -- Beneficiary designations and powers of attorney almost always need updating
- When you buy or sell property -- Real estate must be properly titled in your trust to avoid probate
- When children or grandchildren are born -- Guardianship designations and inheritance provisions need to reflect your current family
- If a beneficiary becomes incapacitated or passes away -- Contingent beneficiary designations become critical
- After major tax law changes -- The SECURE Act, estate tax threshold adjustments, and state-level changes can all affect your plan
Even if nothing has changed in your life, it is wise to review your plan every three to five years to ensure everything still reflects your current wishes and circumstances.
What a Comprehensive Estate Plan Includes
A strong estate plan is not just a will. It is a coordinated set of documents that cover your assets, your healthcare, and your legacy -- both during your life and after.
1. Last Will and Testament
Directs how assets are distributed after death and names guardians for minor children. But remember: a will alone does not avoid probate, and it does not cover assets with named beneficiaries like retirement accounts or life insurance.
2. Revocable Living Trust
Avoids probate, allows for smoother and more private asset transfers, and provides for management of your affairs during incapacity. Essential for anyone with real estate, blended families, or complex wealth management needs.
3. Durable Power of Attorney
Gives someone you trust the legal authority to make financial decisions on your behalf if you become incapacitated. Without this, your family may need a court order to access your accounts or manage your affairs.
4. Healthcare Directive and Living Will
Outlines your medical wishes and appoints someone to make healthcare decisions for you. This prevents family conflict during emotionally charged moments and ensures your preferences are honored.
5. Beneficiary Designation Review
Your will does not override the named beneficiaries on IRAs, 401(k)s, life insurance, or other accounts with transfer-on-death designations. These must be reviewed and updated independently -- and they must be consistent with your overall plan.
The "Invisible" Part of Estate Planning
Many advisors treat estate planning as a checkbox. At Compound Advisory, we see it as an integral part of your financial plan. We coordinate with your estate attorney to make sure your documents match your overall strategy:
- Ensuring your trust is actually funded -- assets titled correctly and accounts registered properly
- Confirming beneficiary designations align with your wishes across all accounts
- Integrating estate planning with your tax planning and investment strategy
- Adjusting the plan as your life, your family, and the law evolve
We do not just ask "Do you have a will?" We ask, "If something happened tomorrow, would your family know exactly what to do -- and would your plan reflect who you are today?"
Estate Planning Checklist
Use this list to assess where you stand:
- Documents reviewed within the last three years
- Will updated to reflect current wishes
- Revocable Living Trust in place if you own real estate or want to avoid probate
- Durable Power of Attorney for financial decisions
- Healthcare Directive and Living Will
- Beneficiary designations current on all IRAs, 401(k)s, and life insurance policies
- Trust properly funded -- assets titled correctly
- Plan reflects recent life changes including marriage, divorce, grandchildren, or business sale
- Estate plan complies with current state laws, especially if you have relocated
- Executors, trustees, and healthcare proxies are still the right people
If you have gaps on this list -- or if it has been a while since you reviewed your plan -- we invite you to schedule a complimentary Retirement Clarity Assessment. As a fee-only fiduciary, Compound Advisory is designed to help you coordinate every piece of your financial life, including the estate planning elements that too often fall through the cracks.
Compound Advisory is a registered investment advisor. Estate planning services are coordinated through qualified estate attorneys. All investing involves risk, including the possible loss of principal.