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Simple Estate Planning Steps

Simple Estate Planning Steps

A primary goal at Abacus is helping people face the emotionally complex and “taboo” subject of money so they can make conscious and empowered financial choices. This becomes even more critical 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 is actually its own life-affirming opportunity for empowerment, too. 

Surprisingly, many 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. Thoughtfully answering the questions below will help make the topic less scary and ease worries of uncertainty, which can give you more purpose and joy in your daily life:

  1. 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?
  2. 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?
  3. 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?

Estate Planning Nuts & Bolts

The “big four” documents in most estate plans are a living will, revocable trust, advance healthcare directive, and a durable power of attorney. These documents answer the important questions: Who will unwind your estate? Who takes care of your children? Who is responsible for handling your financial affairs in the event you become incapacitated or die? 

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 enormous job? Here are some tips:

  1. Similar lifestyle and responsibility. Your long-lost college roommate who 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.
  2. 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.
  3. 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.

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 essential. Whatever you put down will be far better than letting a court decide for you, which is what happens in the absence of estate planning documents.

Other Estate Planning Areas You’ve Probably Forgotten About

  1. Have a trust and fund it. Most of us know we should have a trust, but it’s useless if your assets (like your house and investment accounts) aren’t titled in the trust’s name.
  2. Update your beneficiary designations. Retirement accounts and life insurance policies cannot be held in a trust, so update beneficiaries annually to reflect your current wishes.
  3. Make sure all of your financial documents can be easily obtained by the potential executors of your estate. Executors will need your account statements, tax returns, important documents, and a list of contacts for your accountant, insurance agent, and financial advisor. Keep this in a paper file or a Dropbox account (shared with your executors), or have your financial advisor or attorney keep it for you.
  4. Consider a co-signer. Use a trusted relative as a co-signer on your checking and savings account so bills can get paid seamlessly before the executor is able to take over.
  5. Communicate often with people close to you about your final wishes. You should also make sure people close to you know the location of important documents and items (like your safe deposit box key and safe combination). 

Your Digital Property

It’s the 21st Century and your digital footprint will inevitably outlive you, so decide now what you want to happen to your email and social media accounts after you die. A few ways to save your loved ones the time and stress of dealing with your accounts are:

Review User Agreements

Be sure to review the user agreements for all of your accounts in detail, as they will often outline the steps you can take now to control the fate of your accounts at death. Here are two examples:

  • Gmail: Turn on the “Inactive Account Manager” feature to ensure that your account will be closed after a 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.

Appoint an Account Guardian

Choose someone to delete an account on your behalf after you die if the account contains particularly sensitive information you don’t want disclosed. You’re taking a big risk by providing the login details for a specific account to the guardian during your lifetime, so make sure that you trust this person completely.

Create a Technology Addendum

Companies like Microsoft, Apple, and Amazon (to name a few) will not provide a deceased user’s login information to anyone, not even the executor of the user’s estate. One way around this is to use a program like 1Password or LastPass, both of which store logins for all of your accounts. You can also add a “technology addendum” to your will. This should include any passwords for 1Password or LastPass, your computer, and your phone. Passwords are extremely important if you turned on two-step verification for any of your devices, and you’ll need to be diligent about updating your addendum as passwords change.

Last Words…

This is a big subject, so focus on what’s important. You can’t control when a major life or death transition happens, but you can break down life’s uncertainties into manageable actions. Prepare yourself by letting go of expectations and having systems in place to prevent hasty estate decisions based on fear. By focusing on and creating systems of small action steps toward major life goals, you can exert a sense of order and control over what poet Mary Oliver calls this “one wild and precious life.”

Estate planning is more than just providing financially. It must also provide a simple and stress-free transition for your family after you’re gone. A good financial advisor will ask you about these things regularly, and they will happily help you provide for your loved ones, now and in the future. Don’t hesitate to reach out today.

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