We are all pretty used to planning our finances around certain life events. Can I afford to change jobs? When can I retire? Should I sell my house? Can we afford to expand our family? But what about later? Who should handle your affairs for your family if you can’t? How will your partner or spouse manage? How much money should you leave, and to whom?
The hardest part of financial planning isn’t the numbers, it’s the decisions. And though no one likes to think about their own death, end of life planning is the last legacy we leave to our loved ones. Imagine if you died suddenly; who would be affected? What arguments might it cause if your wishes and feelings hadn’t been clearly laid out?
Many people put off estate planning for lots of different reasons: they’re too busy, they think they have plenty of time, they believe they don’t have enough assets to worry about, they’re confused and don’t know who can help them, or they just don’t want to think about death.
But one of the greatest gifts you can give your loved ones is to take care of this while you’re alive and well. Leaving them to pick up the pieces and guess what you would have wanted is unfair to them and may not end as you would have liked.
Leave Your Affairs in Order: An Estate Planning Checklist
So, where do you begin? Estate planning may look slightly different from one person to the next, but generally, the following list will cover the bases and be immensely helpful to those you leave behind.
#1. Talk to Your Partner or Spouse About Your Estate Plan
Estate planning involves considering some weighty decisions when it comes to long-term care, powers of attorney, and other situations that may arise should you become mentally incapacitated.
Although these are not the sunniest of topics, it’s important to express why you’re opting for the choices you feel most aligned with. This will ease those processes for your loved ones, should these things ever come to pass.
Making sure your partner knows the location of your important documents, how to crack all your passwords after you’ve gone, your wishes and feelings for your healthcare and your funeral – is an important conversation that, most of all, communicates love and care. It says, “I will still love you when I’m not here, and this is how I show you.”
And don’t forget to ensure your partners know all the ins and outs of running your home and family finances. If you are the one in your relationship who always handles the bills and finances, thinking you’re saving your partner the work, you may also be doing them an injustice in the long run by inadvertently leaving them totally lost if anything were to happen to you.
It’s crucial you both know exactly what it takes to run your home. Estate planning is not just about deciding who to leave what, it’s about making sure your partner can pick up the threads in the wake of your loss, and at the very least, feel financially confident.
#2. Make a Detailed Inventory of Your Belongings
Make a list of your assets, including everything from your home to vehicles, collectibles, bank accounts, investment accounts, insurance policies, and retirement plans. Everything. And note who owns them and who the beneficiaries are, if any.
Every family has heirlooms, and every piece tells a story. It’s common for estate plans to contain physical objects that matter dearly to their owners, such as furniture, garments, jewelry, hobby collections, and memorabilia.
Keeping the story of the object alive can sometimes be more important than transferring its monetary value to the next generation. You may like to consider recording a video or writing down the meaning behind certain objects. Maybe your great-grandmother’s silver platter doesn’t hold much monetary value, but helping your partner understand why it’s been stuck in the back of your cupboard all these years, and the sentimental value it holds, can be a priceless gift.
If your will includes directions for the distribution of your personal effects, you may also want to consider informing your executor or administrator ahead of time and providing them with a copy of the list. Or you may wish to leave a separate list, if permitted under your state’s law.
In short, the person handling your estate should be aware of your wishes so that your personal items don’t disappear on a first-come, first-served basis before the formal probate process begins.
#3. Collect and Secure Your Important Documents
As you start to gather your documents together, make sure there’s one central location where you’ve written down all of your important information. What that includes is a matter for you to decide, but there are some fairly vital bits and pieces that even the most organized people may overlook.
Obviously you’ll need to have written down all of your assets, insurance policies, bank accounts and passwords to online accounts. But you can go further than that.
Personal information you might like to keep listed includes information about your educational and/or military history, employment history, names and phone numbers of close friends and important contacts, and the location of important documents like your estate documents, marriage certificate, financial statements, and bank account information.
Most of us now have online accounts, including email, Facebook, online banking, PayPal, etc. Make a list of all of your accounts along with logins and passwords – or ideally, use a reputable password manager – and give your partner the authority and instructions to access and handle your digital assets after your death.
Make sure everything is stored safely and that your partner and/or your executor knows where to find them. If you have access to a secure online vault, use it to keep your important documents and, again, share your login information with your trusted contact.
#4. Make a Will
Wills are the documents that most often come to mind when we talk about estate planning. It is the only legal way to appoint a guardian for your minor children. A will can also be used for other estate planning purposes, such as who should receive any life insurance payout.
Your will can name your beneficiaries and offer a great deal of control over how your assets will be distributed, because whoever is listed as your beneficiaries on insurance policies and investment accounts will receive the assets – regardless of what your will says.
One drawback of using a will for passing on assets is that they are subject to probate, which can be lengthy, expensive, and public. You’ll want to hire an attorney to create a will, particularly if you are using it to name a guardian for your children. If your child has special needs or if the care of your child is complicated in some way, an attorney can guide you in creating a plan that aligns with your wishes.
The selection of an attorney is very personal, so it may make sense to start by asking someone you know and trust. An important consideration is that wills and estates are very specialized areas of law. The attorney you choose must be one who specializes in estate planning; a generalist may not have the expertise you need.
#5. Arrange a Durable Power of Attorney and Make a Living Will
When you select someone to be your durable power of attorney, they can make decisions and manage your affairs on your behalf should you become mentally or physically incompetent to manage your affairs. They can make decisions regarding all of your personal, financial and business matters.
You also need to appoint someone to be your durable power of attorney for healthcare – the person who will be in charge of making medical decisions on your behalf when you are no longer able to make these decisions for yourself.
It’s also important you construct a living will, or an advance directive. A living will is a legal document that provides instructions regarding the medical care you wish to receive should you become incapacitated or seriously ill – do not resuscitate orders, quality of life issues and so on – and can’t communicate your preferences yourself.
You should also make your final wishes known regarding organ and body donation and disposition of your body – burial or cremation.
#6. Plan Your Funeral
Let’s be honest – funerals are logistical nightmares. There is so much to think about, at a time when people do not want to have the burden of planning an event, particularly an event they don’t even know if you wanted. There are a lot of complicated expenses, too. Wouldn’t you want to know it’s all taken care of?
Also, what if your innermost desire had been to have your ashes scattered at your favorite beach that held so many wonderful family memories, but you never told anyone? If you hadn’t told anybody your wishes, it would certainly cast a heavy burden upon your family to have to decide for you.
And what about taking the opportunity to not only lift all the responsibility of planning from the shoulders of your loved ones, but to really pull out all the stops. Plan the music, the flowers, the pallbearers, the readings. Some people even create laughter from beyond the grave by penning their own obituary.
While there are plenty of companies who help you to save for your own funeral expenses, there are also organizations out there who’ll help you put all those plans in place. This is a great way to alleviate the pain and stress from your loved ones.
#7. Keep Your Estate Plan Updated
When it comes to estate planning, executing your will and other estate documents is only the first step. To help ensure that your estate plan stays in tune with your goals and needs, it’s important to review and update it on an ongoing basis.
Have you experienced personal or financial changes since you executed your estate documents—for instance, the arrival of a new family member or a significant increase in assets? If so, be sure to update your documents to reflect those changes and take advantage of asset protection measures, if necessary.
Outdated beneficiary designations can derail an estate plan. Review your designations to ensure that the correct people are named, rather than a deceased family member or ex-spouse. If your children were minors when you last reviewed your beneficiary designations, they may now be ready to receive the assets directly.
Things like tax laws also change. You might find out that a plan that felt beneficial a few years ago is suddenly not the best way of doing things anymore, and you could be leaving loved ones less, thanks to newly modified tax rules.
While you’re reviewing your will, review the beneficiaries of any relevant insurance policies and investment accounts. Remember, something that made sense a decade ago might have changed now.
Your estate plan is a snapshot of who you are, and what you want to happen should you die or become disabled right now, in these circumstances. Make sure you keep that snapshot permanently up-to-date so your partner or spouse isn’t left with any unexpected situations to navigate.
Seek Professional Estate Planning Guidance
Estate planning takes some time and requires contemplating a future when you won’t be around. However, it allows you to take control of what happens to your assets, determine the legacy you want to leave, and it helps make things a little easier for those you love during what will undoubtedly be a difficult time for them.
We recommend that you work with a financial advisor and estate attorney to determine the proper course of action to meet your goals and circumstances, as well as to ensure that your estate documents conform to legal requirements.
You know there’s much more to you than the wealth you’ve accumulated in your life. Likewise, your estate plan is about more than just your financial worth. After all, what’s passed down from generation to generation amounts to something far greater than numbers on paper.
Your estate plan can be customized to include specific language that carries your values along with it while still leaving room for your beneficiaries to grow and explore on their own terms. Educational, incentive and charitable trusts are just a few methods available to you to express your values through your estate plan.
If you’d like to have a chat about how to leave your affairs in order, please get in touch. We’d love to help lift the load and help you with your estate planning.