One of the toughest parts of my job as a financial advisor is experiencing the passing of a long-time client. Comforting a grieving family and helping to guide heirs through the account transfer process that follows is both challenging and fulfilling. But all too often, the deceased have unintentionally made the transfer process more difficult for their loved ones by not adequately preparing for their eventual departure from this earth. Recently, one of our clients told me, when reflecting on the lack of planning prior to her husband’s passing, “You think you have more time.”
Indeed, many people think this way. After all, it isn’t a pleasant undertaking to plan for death. My goals in today’s post are to bring this issue to the top of your mind and to encourage you to focus on three areas of your estate plan which we find are often neglected, leading to the biggest headaches for heirs.
Update your Will or Living Trust
Dying without a Will causes your estate to go through “Intestate Probate”, which can be costly and guarantees government influence on the disposition of your assets. If you don’t have a Will or a Living Trust, I cannot encourage you enough to make this a priority. Potentially worse than not having a Will is having one that doesn’t reflect your current wishes, such as the guardian who should be appointed to care for your minor children in the event that both spouses die. In addition, the law has changed dramatically over the past several years with regard to estate taxes. Your plan may need to be updated to reflect those changes.
Update your IRA Beneficiaries
This can be done very easily by completing a Beneficiary Designation Form. You should also look at any company retirement plans or IRAs held at other institutions. If you don’t have both primary and contingent beneficiaries listed, consider adding them. If you’d like to review the current beneficiaries listed on your IRA, give us a call.
Add a Beneficiary to Your Non-IRA Brokerage Account
A common misconception is that beneficiaries can only be designated in IRAs or qualified retirement plans like 401(k)s. But you can actually designate beneficiaries on certain non-IRA brokerage accounts as well. Schwab calls this a “Transfer on Death” (TOD) feature. If you don’t have a Will or Living Trust, at minimum you should avail yourself of this option. And if you do have a Will, make sure that adding this feature doesn’t interfere with a carefully crafted estate plan. Give us a call if you’d like to learn more about TOD designations.
These suggestions only scratch the surface of comprehensive estate planning. If you’re in need of more guidance or if you’d like a recommendation for a capable estate planning attorney, we can point you in the right direction. Don’t fall into the trap of thinking you have plenty of time. Maybe you do. But what if you don’t?