A primary goal of mine as a Financial Advisor at Abacus is to help my clients face the emotionally complex and “taboo” subject of money so they can make conscious and empowered financial choices. This becomes even more important when we understand that money and death are also inextricably linked. We often hear, “You can’t take it with you,” or “Nothing is certain but death and taxes.” Yet many of us avoid making decisions about our deaths because it makes us (understandably) uncomfortable. But the prospect of death can actually be its own life-affirming opportunity for empowerment, too.
Surprisingly, many of my clients find the conversation about their estate planning isn’t depressing at all. Instead, it’s kind of inspiring. Just as with money, talking about death can turn dread into relief, fear into clarity, and helplessness into empowered action.
In this blog, we’ll walk through the components of estate planning—from exploring your personal beliefs about death to understanding the “big four” legal documents you need. We’ll also cover often-overlooked aspects like digital property management and practical tips for a seamless transition.
By addressing these elements head-on, you’ll hopefully not only gain peace of mind knowing your affairs are in order, but you’ll also be showing tremendous care for your loved ones by sparing them difficult decisions during an already emotional time. Let’s transform this uncomfortable topic into an opportunity for clarity and empowerment.
Focus on what matters most.
Reflection Questions: Facing Mortality with Intention
Thoughtfully answering questions about death and mortality can transform an intimidating subject into something more approachable and meaningful. By deliberately considering these aspects of our inevitable future, we often find that uncertainty gives way to clarity, and fear is replaced by a sense of control.
Taking time to reflect on these questions isn’t just about preparing for the end – it’s about enriching your present life with purpose and enabling you to make more conscious choices about how you want to live and what legacy you wish to leave behind.
- What are your beliefs about death and dying? What do you believe happens when you die? What are your current thoughts and fears about your own eventual death?
- What do you want to have happen with your body when you die? Do you want a memorial service before death and after death? What kind of service? Who will be at the service? Where do you want to be in your final weeks or months of life? Who do you want surrounding you?
- Do you have an estate plan? What legal steps have you taken around your eventual death? What still needs to be resolved? Where will your documents be kept? Who will know about your instructions and implement them?
These questions might seem overwhelming at first, but answering them thoughtfully can be profoundly liberating. Many clients report feeling a weight lifted once they’ve articulated their wishes and concerns. This reflection process often reveals values and priorities you might not have fully recognized before. With these insights clarified, they can help you feel better prepared to create a comprehensive estate plan that truly reflects your wishes and provides clear guidance to your loved ones—one of the most caring gifts you can leave behind.
Understanding Estate Planning: Your Financial Legacy Blueprint
An estate plan is a comprehensive set of legal documents that outlines your wishes for how your assets should be managed during your lifetime and distributed after your death. It’s more than just determining who gets what—it’s about making sure your healthcare preferences are honored, protecting your loved ones from unnecessary legal complications, and creating a clear roadmap for those who will manage your affairs. Without an estate plan, state laws will determine how your assets are distributed, which may not align with your personal wishes.
The cornerstone of an estate plan includes these important documents:
- Will: This legal document specifies how you want your assets distributed after death, names guardians for minor children and dependants, and designates an executor to carry out your wishes.
- Revocable Trust: This is a legal document that allows you to place assets to a trust that you can modify during your lifetime. It can help your estate avoid probate (the court-supervised process of distributing your estate) after you pass, maintains privacy, and provides for asset management if you become incapacitated.
- Advance Healthcare Directive: Also known as a living will, this document outlines your medical care preferences if you’re unable to communicate, including end-of-life care decisions and organ donation wishes.
- Durable Power of Attorney: This grants someone the authority to make financial decisions on your behalf if you become unable to do so, helping to make sure bills are paid and financial matters are handled.
These documents can help to address important questions such as: Who will settle your estate? Who will care for your children? Who will manage your financial affairs if you become incapacitated or die?
Choosing the Executor of Your Estate: Who Will Honor Your Wishes?
Just as important as the question of “how” your estate is managed is the “who” you’ve trusted to honor your wishes. For each document, you grant legal authority to someone to act on your behalf. So how do you choose who’s right for such an important job? Here are some tips:
- Similar lifestyle and responsibility. Your college roommate who isn’t super organized and pays bills inconsistently may not be the best person to handle your financial affairs. The childless globe-trotting executive may not be the best person to take care of your kids.
- Willingness. It’s generally best to consider people who have a high likelihood of accepting the role. Additionally, list multiple people in case one person declines or is unable to serve.
- Communication. Get their consent and then express your wishes in person to clear up any questions. It’s critical to get everyone on the same page so there’s no surprises when the time comes to fulfill one’s duty. Writing a side letter to go with your documents can also help provide context and decision-making guidance without the legalese. Some people write letters to their children to be given out at various ages as they mature as a way to send love in case they can’t be physically there for them.
Making an estate plan is the last thing anyone wants to put on their Bucket List. However, making time to consider your best options and update your documentation in support of your wishes is important. This is particularly important for same sex couples in the LGBTQ+ community, who have recently made great legal strides, but still face unique challenges when it comes to estate planning. What you document can often be better than letting a court decide for you, which is what happens in the absence of estate planning documents.
5 Estate Planning Details You Might Be Overlooking
Beyond the fundamental legal documents, a comprehensive estate plan includes several practical considerations that are often overlooked. These details, while seemingly minor, can impact how smoothly your estate is managed after your passing. Taking the time to address these additional elements now can help to prevent headaches for your loved ones later and ensure your wishes are fully honored.
Let’s explore these often-forgotten aspects of estate planning that deserve your attention.
- Fund your trust properly. Creating a trust is only step one—you must retitle your assets (including your home and investment accounts) in the trust’s name for it to be effective. Since best practices vary by state, consider working with an estate attorney who specializes in your state’s laws.
- Review beneficiary designations. Retirement accounts and life insurance policies pass outside your trust through beneficiary designations. Consider scheduling an annual review to ensure these reflect your current wishes and life changes (marriages, births, divorces).
- Organize your financial documents. Create a comprehensive file containing account statements, tax returns, important documents, and contact information for your financial professionals. Store this either physically or digitally in a secure location shared with executors, or with your financial advisor or attorney.
- Establish a financial continuity plan. Consider adding a trusted relative as co-signer on your checking account to ensure bills continue to be paid seamlessly during the transition period before your executor takes control.
- Communicate your wishes clearly and repeatedly. Regular conversations with loved ones about your intentions can help to prevent surprises later. Ensure your executor knows exactly where to find important items like safe deposit box keys, safe combinations, and important documents.
These seemingly small details can help make a difference in how efficiently your estate is settled. While creating legal documents is important, these practical considerations help to ensure your plan works as intended when it matters most.
Remember that estate planning isn’t a one-time task—it requires routine review and updates as your life circumstances change. By addressing these often-overlooked aspects now, you’re providing an invaluable gift to your loved ones: the gift of clarity and simplicity during what will inevitably be a difficult time.
Managing Your Digital Legacy: Estate Planning for the Digital Age
In today’s connected world, your digital footprint requires as much estate planning attention as your physical assets. Your digital footprint will inevitably outlive you, so decide now what you want to happen to your accounts after you die. Social media accounts, email, cloud storage, and digital subscriptions form a significant part of your identity that will persist after your passing. Without proper planning, loved ones may face unnecessary hurdles accessing important information or closing accounts.
A few ways to incorporate digital assets into your estate plan:
1. Understanding Digital Asset Policies
Most online platforms have specific protocols for handling accounts after death, but these policies vary widely. Taking time to review user agreements now can save your family considerable stress later. Here are two examples:
- Gmail: Activate the “Inactive Account Manager” feature to automatically close your account after your specified period of inactivity (you choose the time frame).
- Facebook: Go to “Security Settings” and select whether you want your account to be memorialized or deleted at death. For the memorial option, you must designate a legacy account owner.
2. Appointing a Digital Executor
Consider designating a specific person as your digital account guardian—someone tech-savvy and trustworthy who will manage or delete accounts containing sensitive information. Be cautious about sharing login credentials during your lifetime; only provide this information to someone you trust completely.
3. Creating a Secure Password Management System
Major technology companies like Microsoft, Apple, and Amazon (to name a few) rarely provide account access to executors, even with proper documentation. Consider implementing these solutions to help make your digital accounts accessible:
- Utilize password management services like 1Password or LastPass to securely store all your login credentials.
- Create a formal “technology addendum” in your will documenting access information for password managers, computers, and mobile devices.
- If you use two-factor authentication, include backup codes or recovery methods in your documentation.
- Establish a regular schedule to update this information as passwords and security measures change.
Bringing It All Together: Taking Control of Your Legacy
Estate planning may seem overwhelming, but remember that it’s ultimately about maintaining control over what matters most to you. While you can’t predict when life transitions will occur, you can break down these complex decisions into manageable steps. Creating thoughtful systems now can help to prevent rushed, fear-based decisions later and allow you to maintain autonomy over what poet Mary Oliver beautifully describes as your “one wild and precious life.”
An estate plan encompasses more than financial distributions—it can help create a stress-free transition for those you love during an already difficult time. A good financial advisor should regularly discuss these topics with you and can connect you with estate planning professionals who understand your unique situation. By addressing these matters today, you can help to provide one of the most meaningful gifts to your family: clarity, guidance, and care that extends beyond your lifetime.
Don’t wait to start this important conversation—reach out to a qualified financial advisor today to begin creating your comprehensive estate plan.
