Anyone that has administered the estate of someone who has died knows that the process involves many emails, phone calls, letters, claim forms and going through all of the decedent’s “stuff”. I have been helping my mother administer my father’s estate over the past year. Through this process I have discovered some practical things that anyone can do today to make their estates simpler and easier to administer in the future. Here are the Top 5 practical estate planning tips I would give to my own Mother (or anyone else’s mother or father) so that an estate is easier to administer in the future.
1. Make sure Beneficiary Designations Are Updated. I have reviewed the assets of hundreds of estates. The majority of wealth most people have these days are held in accounts that have beneficiary designations available – this includes life insurance, retirement accounts, bank accounts and brokerage accounts. Beneficiary designations on accounts override anything that your Will or Illinois law says about who inherits the assets of those accounts. Many times we find beneficiary designations that are outdated or blank. You should contact the companies that hold these accounts and confirm your beneficiary designations. Read my previous blog article on the importance of keeping beneficiary designations updated.
2. Reduce the Number of Accounts You Have: When someone dies all of the accounts that they own will need to be transferred to their named beneficiaries or to their estate. Whether an account has $100 or $1,000,000, it takes the same amount of energy and work to transfer that account. It is a good idea to review all of the accounts you have and consolidate them if you don’t have a good reason to keep them separate.
3. Reduce Your Personal Possessions: At our initial meeting clients often are very concerned about how their personal assets – tools, artwork, furniture, appliance, collections and family heirlooms will be divided among their heirs. After talking to their children, clients come back and tell me their family doesn’t want any of their personal belongings such as china, silverware, antiques or collectibles. If you can reduce the amount of your personal possessions today, you are reducing the burden your children or executor will have of doing it in the future. Visit my blog, "How to Deal with all of Your "Stuff" in Your Estate Plan -- Tangible Personal Property" for more information on this topic.
4. Organize Your Online Passwords: We are now living in a digital age. According to this article on average, an e-mail is linked to over 130 online accounts! If someone dies and their executor or family members don’t have passwords to their online accounts – it can be a nightmare for them to access photos, documents, or other needed information that is stored online. It is very important that you organize your passwords in a way that your helpers can find them if necessary. You can use a password manager such as lastpass.com or dashlane.com to help with this or you can start by listing all of your accounts and passwords on a spreadsheet and update it regularly. Click here to read my blog on digital assets.
5. Have Basic Estate Planning Documents in Place: A Will and Power of Attorney documents are basic estate planning documents everyone should have. Without a Will your default estate plan is defined by the state of Illinois – probably not what you want. Without Power of Attorney documents in place, a family member or friend is going to have to petition the court to become your guardian in order to make medical and financial decisions for you if you become mentally incompetent. For many people a simple Will-based plan is all they need. Because of asset and/or family issues – sometimes a Trust-Based Plan is a better option. Listen to my WJBC segment to learn more about the difference between Wills and Trusts
By doing these five things you can organize and simplify your estate so it is easier to administer in the future.
This article is a service of Attorney Chad A. Ritchie and the Ritchie Law Office, Ltd. Click Here or call (309) 662-7000 to learn more about what it’s like to meet with the Ritchie Law Office, Ltd. for your initial estate planning meeting. We call this initial estate planning meeting a “Ritchie Legacy Planning Session”.
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