An estate attorney we work with says she laughs when people say, “If I die…” Because unless that person knows a secret to eternal life the rest of us don’t, a more appropriate phrase would be, “When I die.” We all hope for some warning to prepare ourselves and our loved ones, but sometimes there is little to no warning at all.
Now imagine you’re the person left behind when your spouse, parent, or loved one passes away and in your grief you must also carry out their final arrangements. Anyone who’s ever faced the task of closing bank accounts, transferring assets, and figuring out what the deceased’s wishes are (and how to honor them), will tell you how complex and confusing it is.
You can save your loved ones unnecessary work and heartache by doing some simple but important preparation first. (And yes, that also means you twenty- or thirty-somethings!):
1. Organize Your Financial Documents
Create a folder or binder of all the important financial details in your life so someone can find everything. Accounts, policies, loans, property, important documents – heck, you’ll feel more organized too and might remember accounts you’ve forgotten about. This is a huge gift to your spouse, children, or whoever will pick up the pieces if something happens to you.
See here for a great list of what this binder should include.
2. Confirm Assets are in the Name of Your Trust
Help everyone avoid hassle. Many states have low thresholds for estates entering probate and in some states (like California) it is lengthy and expensive. My father was organized and had done almost everything right, except he forgot to put his snow bird condo in Arizona in the name of his trust. As his executor after he unexpectedly passed, I had to open probate in not one but two states because his primary residence was in Minnesota. Probate can mean time, hassle, attorneys, fees, and paperwork that could have been avoided.
Consulting an estate attorney is key. Many will give you a complimentary consultation to make sure you have a living trust (if you need one), everything is titled properly, and your wills and advanced health care directives align with current laws in your state.
Thinking you don’t have a big estate and don’t need to do estate planning yet? Not true. Even 18-year-olds need an estate plan so if they are seriously injured at college, their parents can actually speak to their doctors. Often your primary care physician can help with a form for that.
3. Revise Credit Card Accounts
Get your own credit card. If you are a couple who shares credit cards, they are likely in the name of one person and the other is merely an authorized user. Credit cards are not “joint.” Just because your name is on the card does not mean you are actually the main cardholder. You are responsible for all the debt and get none of the ‘good credit’ that makes your credit score worthy. When the primary cardholder dies, the other person usually cannot just assume the account. One widow I know was shocked to find out she had no credit cards in her name and had to start over and apply for them after her husband of 25 years died. Check all accounts and find out who is the primary cardholder. Make sure you each have a card or two in your own name.
4. Review Beneficiary Designations
Make sure all insurance policies, annuities, and retirement plans list the proper designated beneficiary(ies). You’d be surprised how many don’t list anyone (and end up in probate or worse), list a former spouse, or list someone you absolutely would not want your money to go to. You can state who gets what in a legal will, but if your 401k account lists your not-so-friendly ex as the beneficiary, that designation trumps your will.
5. Create an Estate Plan
Estate planning. Do it. Your financial advisor can help you find an estate attorney if you don’t already have one. Every single adult needs a will, an advanced health care directive, and powers of attorneys for health care and financial matters. Many adults need a living trust or other documents as well, depending on where you live and what you own. Same-sex couples should make a concerted effort to review their existing estate plan. While there isn’t necessarily a need to draft estate planning documents differently, there are some estate planning tips same-sex couples should keep in mind.
Please, please do not put this off any longer. Many people put on this back burner for way too long. Please don’t do this to your loved ones. Start the process this week by following these simple estate planning steps:
Step 1: Call an estate attorney.
Step 2: Fill out the questionnaire they send you.
Step 3: Meet with them once to make a few final decisions and sign papers. It isn’t as hard as you think, and it is money well spent.
NOTE: We rarely recommend estate planning using online software. It just can’t know all the possible situations that apply to you and your family.
6. Tell Your Loved Ones Your Wishes
Talk to your loved ones. What kind of funeral would you like? Do you want to be buried in a biodegradable cardboard box or have a marble mausoleum? Want the Rolling Stones streamed at your memorial? Tell people.
My dad had actually written his own obituary and I found it on his computer desktop after he died. I cried and laughed when I read it and even learned things I didn’t know about him. And we used the content. At first, I thought, “What a morbid thing to do, Dad.” But it saved me hours of time and tears, and I loved that it was in his words.
I have a playlist I tell my family I want played at my memorial. I’m a healthy 60, but hey, I actually love listening to the song list because it includes all my favorite music. So maybe when I die in 40 years, my children and grandchildren will be having fun and dancing to the songs that embodied my life.
The Greatest Gift You Can Give Your Loved Ones
Whether you are young or older, healthy or less so, your family will not only thank you for being the Marie Kondo of financial organization but also for sharing your hopes and dreams of how you’d like to be remembered. If you want support getting your end of life affairs in order or have questions about drafting your estate plan, an Abacus financial advisor can help. Schedule a call today.
