You have to be willing to get a little dark to talk about legacy planning. But the sooner you do, the better off you may be.
The lack of a legacy plan can cause chaos and stress for the people who survive us. This topic was the subject of a recent article from Investopedia, “Estate Planning: 16 Things to Do Before You Die.”1 The article paints a clear picture of what you should do to make your passing easier on the people you care about. A few of the key points are highlighted here.
A good place to start is to itemize your possessions. Grab a piece of paper and conduct a thorough inside and outside tour of your home to create a comprehensive inventory of all your valuable possessions.
And then, do the same for your non-physical assets, including things you own on paper or other entitlements that are predicated on your death. This should include brokerage accounts, 401(k)s, IRAs, bank accounts, life insurance policies, and other policies such as long-term care, homeowners, auto, disability, and health insurance.
Make sure you include account numbers and a full rundown of the location of any physical documents that are in your possession. It may also be a wise move to include the contact information for the firms holding your non-physical possessions. And, along those same lines, it’s important to also assemble a list of your debts.
While you’re looking at your accounts and insurance policies, you’ll want to double-check your designated beneficiaries. It’s important to remember that it doesn’t matter how you direct these accounts to be distributed in your will and trust — the designations identified in your retirement account will take precedence.1
After your beneficiaries are correct, you’ll want to consider assigning transfer on death designations. Assets that are given in a will can go through probate, which is often costly and very time-consuming. It’s even more frustrating when you hear that many accounts, like bank savings, CD accounts, and individual brokerage accounts are needlessly probated every day.
If you have one of these accounts, they can be set up or amended to have a transfer-on-death designation, which lets your beneficiaries receive assets without going through the probate process. Touch base with your custodian or bank to set up a transfer on death designation for your accounts.
If you’ve noticed something missing on this list, you’re paying attention. It seems remarkable to get this far without mentioning a will, but it just goes to show how many moving parts there are when it comes to legacy planning. The bottom line: Everyone over the age of 18 should consider a will. It’s the rulebook for distributing your assets and it could prevent considerable chaos for your heirs.
Thankfully, wills can be a relatively inexpensive part of the legacy planning process. Many attorneys can help you create a will for less than $1,000, depending on the complexity of your situation. You can also write your own will with online services and other software.
It can be easy to overlook legacy planning on your journey to retirement. With the help of some of these steps, and by contacting a trusted financial service professional, you can make sure that you don’t.
1 https://www.investopedia.com/articles/retirement/10/estate-planning-checklist.asp
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