Estate Planning Essentials

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Estate Planning EssentialsIt is important for your family to have access to essential documents upon your passing, so they will know how to handle all of your affairs, and to avoid common problems with insurance claims, courts, etc.

MSN Money says that, “The financial consequences of failing to keep your documents in order can be significant. According to the National Association of Unclaimed Property Administrators, state treasurers currently hold $32.9 billion in unclaimed bank accounts and other assets.” Your family could be completely unaware of assets owed to them, and unless you provide them with all of the appropriate paperwork, these assets could likely be lost forever. We recommend putting together a comprehensive folder of documents that family members can access in case of an emergency. These can be kept with your attorney, in a safe-deposit box, or at home in a fireproof safe that someone else knows the combination to.

Here is a list of the documents we recommend to have completed and stored safely away for your family:

The Essentials. An original will is the most important document to keep on file. This enables you to dictate where your assets should go after you’re gone. If you don’t have a will upon your death, you lose all control of how your assets are handled, and state law will determine what happens.

Having the original version is important, as family members could challenge a copy of the will in court, dragging out the already onerous process of distributing an estate accurately.

In addition to a will, and depending on how complicated your estate is, you may also need a revocable trust. A trust is more private than a will and is harder to dispute. A revocable living trust can be changed anytime during your lifetime, and after you transfer ownership of assets to the trust, you can serve as the trustee on behalf of the beneficiaries you designate.

A letter of instruction is another vital document to leave for your family because it’s a good way to make sure your executor has the names and contact information of your attorneys, accountants, and financial advisor.

Finally, make sure your heirs have access to a durable power-of-attorney, because without that, nobody can make financial decisions on your behalf.

Proof of Ownership. Make sure to keep all documentation of home and land ownership, cemetery plots, vehicle titles, stock certificates and savings bonds, any partnership or corporate operating agreements, and a list of all brokerage and escrow mortgage accounts.

All assets should have accompanying documentation that is accessible to your family; otherwise they may never know you had them. In addition, make sure to have lists of loans you have made to others, since those could count as assets in your estate, and lists of debts you owe, to avoid surprising your family. Finally, make the most recent three years of tax returns available because, “Looking at last year’s returns offers a snapshot of what assets we should be looking at for this year,” says Lesley Moss Mamdouhi, a principal at estate-law firm Oram & Moss in Maryland.

Bank Accounts. It is a good idea to share a list of all accounts and any online log-in information with your family members so they can notify the bank of your passing. If these accounts never get settled, they will become dormant and end up as property of the state. Also, list any safe-deposit boxes you own and register someone else’s name on them so they can have access without a court order.

Health Care Power of Attorney. Possibly the most important health care document to fill out in advance is a durable health care power of attorney. This allows whomever you designate to be able to make health care decisions on your behalf, should you ever become incapacitated. This document should be in compliance with federal health-information privacy laws, so doctors, hospitals, and insurance companies can speak with your designee. An Authorization to Release Protected Healthcare Information form may also be necessary.

Life Insurance and Retirement Accounts. Copies of life insurance policies are extremely important for your family to have. Family members need to know the name of the carrier, the policy number, and the agent associated with the policy. According to David Peterson, CEO of Peak Capital Investment Services in Denver, CO, you will want to “be especially careful with life insurance policies granted by an employer upon your retirement, since those are the kind that are most often missed.”

We also recommend that you draw up a list of pensions, annuities, individual retirement accounts, and 401ks for your spouse and children. IRAs are considered dormant or unclaimed if no withdrawal has been made by age 70 ½, and according to the National Association of Unclaimed Property Administrators, tens of millions of dollars are lost in unclaimed IRAs every year.

Marriage and Divorce. Even though this may seem silly after years of marriage where nobody has questioned you, make sure your family knows where your marriage license is. When one of you passes, proving that you were married in order to claim assets, manage accounts, etc., is much easier if you have the documentation handy.

For divorcees, it is important to leave behind the divorce judgment and decree or stipulation agreement, because these documents lay out child support, alimony and property settlements, and may also list the division of investment and retirement accounts.

If you have any questions about the documents you should store for your family, give us a call. We can help make sure your family is equipped with everything they need.


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