Is Your Estate as Planned As You Think?
You’ve considered how you want your estate to be distributed after you die. Hopefully, you’ve even written a will to make sure your wishes will be followed. So, your estate is planned…right?
While most of us would like to think that estate planning is that simple, there are other things to consider as part of the process, and topics that need to be revisited over time. Sometimes, your life changes. Sometimes, the law changes — as it did with the SECURE Act (the Setting Every Community Up for Retirement Enhancement) Act, signed into law by President Trump in December 2019, affecting estate planning in different ways.
When you die, your executor will typically have more than 100 tasks to handle to settle your estate. Anything you can do in advance to add clarity and lessen the burden of that person’s work is a very good idea. Consider this list of seven items as you make sure your estate is as planned as you think:
Is your will current?
Assuming you’ve written your will (and if you haven’t, be sure to do so soon), how long has it been since you drafted it? Have any major changes in your life taken place since? If so, it’s likely time to update it.
For example, if you designated in your will that your home should go to your children but you’ve since sold the house, your will needs a refresh.
Review your will to ensure it’s an accurate representation of your assets and your wishes now, not 10+ years ago.
Is your will detailed enough?
When most people think of their estate, they think of the big things — the house, the car, the diamond bracelet. But what about smaller items with great sentimental value, such as the Scrabble board three generations of family members gathered around during the holidays? Or the book of bedtime stories your parents read to you each night?
Unfortunately, at times, family disharmony and disputes can occur over these items even more than ones with great monetary value. If you know of possessions that could become the subject of fights, spell out who you want to have them in your will, even if these mementos and paraphernalia don’t have a high dollar value.
Have you spelled out your wishes in a way that is legally binding?
Each state has different rules regarding what makes a valid will. Some may allow handwritten wills; others may require a certain number of witness signatures to distribute real estate.
With all these differences, it is always a good idea to check with a local attorney to see if your will is valid. You don’t want to make a mistake that could lead to problems for your executor down the road.
Also, the SECURE Act offers an important reason to review your beneficiary designations and any trusts. The law removed so-called “stretch” provisions for beneficiaries of Individual Retirement Accounts (IRAs) and defined contribution plans, like 401(k)s. So, it’s vital to review the beneficiary designations of your retirement accounts to be sure they meet the new rules. And the SECURE Act altered the rules for IRA distributions when trusts are beneficiaries of IRAs and 401(k)s, so you might need to deal with that, too.
Have you planned your funeral in full detail?
When you die, your loved ones will likely be reeling. So why make them plan out your funeral (and potentially try to guess your wishes)? You can help them immensely by pre-planning your funeral.
Most funeral directors will gladly meet with you to pre-plan, and in some cases will do so even if you can’t pre-pay for the services. It is perfectly appropriate for you to leave instructions regarding your wishes, including whether you prefer to be cremated versus buried in a casket; what you’d like services to include (music? scripture readings? eulogies?) and whether you’d like charitable donations to be made in lieu of people sending flowers.
Are your financial affairs organized?
Your executor will need to know about recurring payments, bills, account numbers, online passwords and much more. Making a list of typical monthly bills and documenting your account numbers and access codes will greatly simplify your executor’s job.
And don’t forget the automatic deductions or charges on your credit card. Things like internet-based subscriptions, club memberships, recurring charitable donations and even automatic utility payments can sneak up on an executor if there’s no monthly bill in the mail to go along with the charge.
Have you made arrangements for the care of those who survive you?
If you are a caregiver to a parent, spouse, child or another loved one, it’s wise to have a detailed plan in place about who will care for them if they outlive you.
Don’t forget your pets, too. Because the laws regarding care for animals spelled out in a will differ from state to state, you may be better off just making your loved ones aware of your intent on this one, instead of formalizing your wishes.
Do you have a method in place to distribute your personal property?
It’s important to figure out how your heirs will divide up the possessions not explicitly listed in your will. Ultimately, everything from dishes to lawn care equipment will need to be either distributed to one of your beneficiaries or donated or sold.
While your beneficiaries might, for the most part, agree about who should get what, disputes can quickly arise regarding valuable or sentimental items and the fairness of the process. For example, is it fair if one child gets all the items of financial value and the other gets the items of sentimental value?
Think through how you’d like your beneficiaries to proceed and let them know.
Most of us hope our families will remain strong after we are gone. Doing a comprehensive job in planning our estate can help ensure that this wish becomes reality. Anything you can do to help your loved ones through that difficult time by managing your affairs today is a wise move that will be greatly appreciated.
Patrick O’Brien is the co-founder of Executor.org, a comprehensive online resource that helps executors manage their duties. Free tools on the site include a step-by-step interactive executor checklist to simplify the role.