Estate Planning: 13 Things To Do Before You Die
Many of us like to think that we’re immortal. The old joke is that only two things in life are for sure: death and taxes.
Not only is it important that you have a plan in place in the unlikely event of your death — no one expected to lose Prince so soon — but you must also implement your plan and make sure others know about it and understand your wishes.
As Benjamin Franklin’s famous quote goes, “By failing to prepare, you are preparing to fail.”
Unless Prince’s mysterious vault ends up containing a will, he died intestate — and perhaps didn’t tell anyone his thoughts about or plans for his estate.
If you’ve procrastinated on yours, this article will help you get going in the right direction.
1. Do a Physical Items Inventory
To start things out, go through the inside and outside of your home and make a list of all items worth $100 or more.
Examples include the home itself, television sets, jewelry, collectibles, vehicles, guns, computers/laptops, lawn mower, power tools and so on.
2. Follow with a Non-Physical Items Inventory
Next, start adding up your non-physical assets.
These include things you own on paper or other entitlements that are predicated on your death.
Items listed here would include: brokerage accounts, 401k plans, IRA assets, bank accounts, life insurance policies, and ALL other existing insurance policies such as long-term care, homeowners, auto, disability, health and so on.
3. Assemble a Credit Cards & Debts List
Here you’ll make a separate list for open credit cards and other debts.
This should include everything such as auto loans, existing mortgages, home equity lines of credit, open credit cards with and without balances, and any other debts you might owe.
A good practice is to run a free credit report at least once a year. It will identify any credit cards you may have forgotten you have.
4. Make an Organization & Charitable Memberships List
If you belong to certain organizations such as the AARP, The American Legion, Veteran’s associations, AAA Auto Club, College Alumni, etc, you should make a list of these.
Include any other charitable organizations that you proudly support or make donations to.
In some cases, several of these organizations have accidental life insurance benefits (at no cost) on their members and your beneficiaries may be eligible.
It’s also a good idea to let your beneficiaries know which charitable organizations are close to your heart.
5. Send a Copy of Your Assets List to Your Estate Administrator
When your lists are completed, you should date and sign them and make at least three copies.
The original should be given to your estate administrator (we’ll talk about him or her later in the article).
The second copy should be given to your spouse (if you’re married) and placed in a safe deposit box. Keep the last copy for yourself in a safe place.
6. Review IRA, 401(k) and Other Retirement Accounts
Accounts and policies in which you list beneficiary designations pass via “contract” to that person or entity listed at your death.
No matter how you list these accounts/policies in your will or trust, it doesn’t matter because the beneficiary listing will take precedence.
Contact the customer service team or plan administrator for a current listing of your beneficiary selection for each account.
Review each of these accounts to make sure the beneficiaries are listed exactly as you like.
7. Update Your Life Insurance & Annuities
Life insurance and annuities will pass by contract as well, so it’s just as important that you contact all life insurance companies where you maintain policies to ensure that your beneficiaries are listed correctly.
8. Assign TOD Designations
TOD stands for transfer on death. Many accounts such as bank savings, CD accounts and individual brokerage accounts are unnecessarily probated every day. Probate is an avoidable court process through which assets are distributed per court instruction, which can be costly. Many of the accounts listed above can be set up with a transfer-on-death feature to avoid the probate process. Contact your custodian or bank to set this up on your accounts.
9. Select a Responsible Estate Administrator
Your estate administrator will be responsible for following the rules of your will in the event of your death.
It is important that you select an individual who is responsible and in a good mental state to make decisions.
Don’t immediately assume that your spouse is the best choice.
Think about all qualified individuals and how emotions related to your death will affect this person’s decision-making ability.
10. Create a Will
Everyone over the age of 18 should have a will. It is the rulebook for distribution of your assets and it could prevent havoc among your heirs.
Wills are fairly inexpensive estate planning documents to draft. Most attorneys can help you with this for less than $1,000.
If that’s too rich for your blood, there are several good will-making software packages available online for home computer use.
Make sure that you always sign and date your will, have two witnesses sign it and obtain a notarization on the final draft.
11. Review & Update Your Documents
Review your will for updates at least once every two years and after any major life-changing events (marriage, divorce, birth of child, and so on).
Life is constantly changing and your inventory list is likely to change from year to year too.
12. Send Copies of Your Will to Your Estate Administrator
Once your will is finalized, signed, witnessed and notarized, you’ll want to make sure that your estate administrator gets a copy.
You should also keep a copy in a safe-deposit box and in a safe place at home.
13. Visit a Financial Planner or an Estate Attorney
While you may think that you’ve covered all avenues, it’s always a good idea to have a full investment and insurance plan done at least once every five years.
Elville And Associates is an Estate and Elder Law Planning firm that proudly serves clients in Central Maryland, the Washington Metro Area, and the Eastern Shore.