For many people, estate planning is about more than transferring assets after you’re gone. It can be about making life easier on your survivors and smoothing the way for your loved ones at what is sure to be a difficult time. If that’s one of the “gifts” you’d like to leave behind, consider taking the following steps.
Work with an attorney: Consult an attorney who will help you prepare a correctly executed will and/or living trust. Depending on your situation, some people choose a living trust as a beneficial way for their heirs to avoid the probate process.
With a living trust, you transfer title of your assets to the trust during your lifetime. When you pass away, trust assets can be transferred immediately, outside of the courts and probate process.
If you aren’t using a living trust, consider other strategies to transfer at least some of your assets easily, without the delay of probate. You could designate a beneficiary on banking and money market accounts, making them payable on death, for example.
Alternately, you can set up a separate bank account with your trusted executor as co-signer. Consider setting up a nominal account with enough funds to cover funeral expenses or home repairs that would be beneficial before a sale.
Set up powers of attorney: Unfortunately, many one of us may go through a period of time when we are no longer able to care for ourselves or make our wishes known. Setting up power of attorney documents can make that difficult transition easier on your loved ones.
The person you appoint can be given the power to make financial decisions and/or healthcare decisions, including the ability to consent to giving or withholding medical treatments.
Make an asset inventory: Maintain an updated list of the assets in your estate. That keeps your loved ones from having to figure out what you have and where. Provide periodic updates to your executor. If you’re not comfortable sharing specific dollar figures, simply sharing where your accounts are located is helpful.
Consider, too, whether it makes sense to consolidate your banking and investment relationships into fewer accounts as you age. That can also simplify and streamline the process.
Gift sentimental items: Divvying up your financial assets is one thing, but some families struggle with sentimental personal items like artwork, heirloom dishes, or jewelry. One way to avoid strife is to designate those items directly in your will or in a “personal property memorandum.”
A personal property memorandum can be written outside your will, as long as the will refers back to it. Once that’s set up properly, you can update this document as often as you like, without officially updating your will.
Communicate during your lifetime: If possible, talk to your heirs about your estate plans before you pass away, particularly if your plan might otherwise contain unpleasant surprises. When people understand why you made certain choices, it’s easier to accept them. Communication, and properly executed planning documents, can be key to a smooth process.
