Things To Do Before You Die: Estate Planning For Your Family

Written By Jyoti Roth

It’s truly amazing how people die everyday and yet there seems to be total confusion and surprise afterwards. For many people without an estate plan or will, this means attorneys and accountants have to be paid, there are probate court fees, title transfer fees, taxes, etc. The unfortunate thing is much of this could have been avoided. An estate plan isn’t going to ease the loss. But it will help a grieving family move forward.

1. Make an Inventory of Your Assets & Debts

You know what you own, where things are, how things are organized…but do your spouse, your children, your family? Maybe they know you own stock, but do they know which ones? Avoid the guessing game and extra cost of tracking down assets and hidden debts by listing everything out in one spot.

2. Keep Accounting and Tax Records

Keep detailed accounting and tax records of everything, and make them readily available to whoever will be handling things after your death. Leave contact numbers for your accountant, tax preparer, etc. 

3. Create a Billing Schedule

If you are the one who takes care of the bills, create a schedule of bills  to take the confusion out of the ordeal. Be sure to include contact info for each bill and also login/password info for any electronically paid accounts.

4. Save All Your Passwords and Login Info

There is no way to access a locked phone without wiping the memory and social media and email provider sites are prevented from giving out passwords to anyone other than the owner. If you want your family to have access to any of your devices, accounts, etc., you need to make sure all of that information is saved somewhere secure but accessible.

5. Grant a Financial Power of Attorney

Give someone you trust the ability to handle your financial matters, such as accounts and property, if you become incapacitated (unconscious, in the hospital, etc.)

6. Name Beneficiaries on Your Accounts

Most bank accounts and retirement accounts allow you to designate a “pay-on-death” beneficiary so that everything automatically transfers over to that person when you die. This can save a ton of time and avoids the requirement of a ruling by probate court that your heir is entitled to receive those account funds.

7. Make A Will

A will gets submitted to probate court where the wishes of the deceased will be legally confirmed (unless challenged by a disgruntled heir). A will accomplishes a lot of different things, such as:

  • Naming an Executor to Handle Things. Your executor will have the authority to handle all of the estate organization and distribution.

  • What Happens to the Kids? You will can list your preferences for who will get custody of your minor children if you and/or their other parent dies.

  • Who Gets What? This is the obvious one. A Will lets people know how you want things divided up among your heirs. A ruling by probate court is generally necessary before property can legally be transferred into the heir’s name.

  • Designate How Debts and Taxes Will Be Paid. This is pretty self-explanatory.

  • Create a Trust. A will could also create a trust for your heirs at your death, which can be useful for distributing wealth a little at a time to overspending heirs. Certain types of trusts can be used to avoid estate taxes as well.

8. Leave a Health Care Directive

If you have thoughts about what happens to you if you are incapacitated, unconscious, etc., then you should make your health care wishes known with a Health Care Directive. You can also appointed a Medical Power of Attorney, which gives another person (your health care agent, often a relative) the power to handle your medical affairs for you and make sure your wishes are carried.

9. Think About Forming a Trust

Trusts are a great way to make every easier and faster for your heirs, as well as avoiding excess costs.  Putting your property into a trust will avoid the cost of probate court, streamline the entire process of your estate distribution, and, for larger estates, can arrange your property to avoid paying estate taxes.

10. Think About Life Insurance

It’s a good consideration to make in order to take care of your loved ones after you are gone. Life insurance can also be used to cover your debts and estate taxes.

11. Taxes

Talk to your tax accountant to strategize when and how to sell assets to avoid capital gains. For example, if you have the wonderful problem of a large estate (we’re talking in the millions) you may need to think about estate taxes.

12. Funeral Expenses and Directions

Make arrangements and leave instructions for your memorial, funeral, and/or disposition of your body. Many people purchase small insurance polices to cover burial expenses and/or pre-purchase plans from local funeral parlors to spare their family the trouble and help ensure their wishes are carried out.

13. Plan for Your Business

If you own a business, you should have a succession plan in place. What happens to the business when you pass away? Will your partners be able to buy out your share? Will your shares pass to your heirs?

 

 

OBLIGATORY DISCLAIMER: this list is by no means an exhaustive list of things to do. However, by completing any or all of these steps now, you are caring for your family and loved ones in the future. 

Jyoti Roth