It’s hard enough to lose a loved one. But it’s even more challenging when the loss is compounded by having to deal with messy estate issues in a time of grief.
An invaluable gift you can offer your heirs is to make that process as easy as possible.
Let’s look at what you can do.
When it comes to your estate, you are in one of three situations: you are single (for whatever reason), widowed (possibly with inherited assets) or married (with a two-step plan ahead of you).
Wherever you fit in, sooner or later, the next generation will have to deal with countless issues when you pass. While a common topic is whether your heirs are psychologically prepared to inherit wealth, that is not our focus here.
Instead, we are focused on the day-to-day process of transferring wealth from one generation to another: from a generation that had decades to accumulate financial and physical assets – to a generation that is hopelessly distracted by life’s concerns, such as children, college, marriage, job stability, market volatility, inflation, retirement planning, empty-nesting, health and aging. It’s unlikely your estate is their top-of-mind.
Add to that the pressures brought by today’s technology. Both you and they now struggle with the following:
- Access to endless information, much of it unvetted and unreliable.
- The ability to implement decisions instantly, with little time for reflection.
- The absence of a paper trail that is now replaced by easy-to-lose digital references.
So, no, it is not enough that you have an estate plan in place. With or without financial advisors or estate planners, you want to be sure to make the asset transfer as smooth as possible. Here are some things that can help:
Update beneficiaries regularly. Life marches on and is affected by births, deaths, marriages, divorces and changed relationships. Therefore, wherever beneficiaries can be indicated, they should remain updated. This is especially troublesome if no living contingent beneficiary is listed, opening the transfer to a probate court’s decision.
Clear up account ownership. Especially with joint accounts, it is easier for you to remove a deceased spouse’s name than to have your heirs struggle with accounts where both account holders are gone.
Consolidate asset accounts with a few providers and custodians. There is no particular value in having IRAs, investments and other asset accounts spread among many institutions. Instead, consider consolidating like accounts with your preferred institutions to facilitate your executor’s task. (You, too, will find them easier to manage in life.)
Share your investment philosophy. Communication is a great facilitator of wealth transfer. When it comes to your investment portfolio, consider sharing your investment thought process with your heir(s), so they understand your strategy and can make informed decisions once they inherit it. (And since portfolios change over time, try to do this every year or two.)
Be sure all accounts have transitioned from physical to digital. If you still hold any physical stock or bond certificates, confirm that they have all been deposited or transferred into active accounts. It may take some detective work to track down stock certificates if companies have merged, been acquired or undergone name changes. But you have a better chance of sorting it out than your heirs, who know nothing of the certificates’ history.
Identify and value all collectibles and other physical assets. You may find that your heirs don’t share your interest in what you valued and collected over the years. Regardless, one of the most challenging tasks is emptying the home of a deceased loved one, having to make hundreds of decisions about one “family heirloom” after the other. Consider creating an inventory of collectibles, jewelry, art, coins, arms and tableware. Jot down any stories behind them and indicate what you think each might be worth. Your heirs or executor will still need to distribute, sell or dispose of them – but you will remove a massive amount of doubt from the process. And they will thank you.
Address how your home will transfer. A family home, or your downsized empty-nest home, can trigger financial and emotional distress. Whether covered by a trust or will – or neither – you can avoid serious family disagreements by discussing your distribution decision openly with each potential heir, accounting for the financial implications in advance and ensuring that all relevant documentation is updated and available. Solidifying your decision legally – and in writing – will defuse many future hard feelings.
Organize your paper and digital trail. Asset transfers glide on a path of documents. Any paper documents related to investments, insurance and your estate (among others) should be filed logically in one safe location. As for digital access to all your banks, brokerage accounts, utility/service providers, online shopping, friends and family, compile a list of each, complete with account numbers, email addresses, contact names/numbers, online usernames and passwords. Because of how sensitive all this information is, find a secure way to store it and be sure someone (your executor, spouse or heir) knows how to access it.
Communicate. The eight actions listed above include many things people find hard to discuss, but that hesitation serves no one. To ensure that your estate is transferred as you had hoped, your heirs must have a solid foundation to lean on. It should include an updated estate plan, knowledge of how you made your decisions and a comfort level with the professionals who helped structure that foundation: your estate planning attorney, financial advisor and accountant.
Having addressed these actions, you can now relax, knowing that you will have made a difficult time much easier for your heirs and loved ones. They will surely be grateful.
Bill Harris is a Retirement Management Advisor® (RMA®), a CERTIFIED FINANCIAL PLANNER™ practitioner (CFP®), a Master Elite Ed Slott Advisor, and author of ‘Inheriting Your Spouse’s IRA’. He is President of WH Cornerstone Investments, a financial advisory firm located in Kingston, MA. Learn more at https://whcornerstone.com/.
This article originally appeared in Old Colony Memorial.