5 Things to Do Now to Make Your Estate Simpler for Your Heirs

It’s easy to put off doing many of these things. But get them done, and your heirs will be thankful you did.

No one likes to think about their own demise, but planning can make your life after your death significantly easier for heirs. Here are five ways to help heirs avoid extra time, money, stress and acrimony after you pass:

1. Keep documents current.

Having a will or living trust is essential – but it isn’t enough. The proper documents need to be updated periodically, especially as life circumstances change.

Many people also fail to update beneficiaries for life insurance, retirement accounts and bank or investment accounts. These assets pass according to the beneficiary designation, if there is one, regardless of what the will or living trust says.

One client had an IRA valued at several million dollars. When he died, the IRA funds went to a woman he hadn’t dated for years instead of to his brother’s daughters, even though they were named as beneficiaries in his trust. The heir indicated on the IRA beneficiary was the former girlfriend, and that was the one that counted. Imagine their surprise, but there’s nothing we could do about it.

2. Assign personal property in advance.

Many people assume that heirs will figure out on their own how to divide personal property, but that can lead to fights. An example of this is three sisters who fought over their mother’s collection of hundreds of porcelain dolls. They had to hire a professional mediator to draw straws until all the dolls were distributed. Had the mother made a personal-property list before she died, significant aggravation and hostility might have been avoided. The list can be handwritten and up-to-date and should be kept with estate-planning documents. The document should also include where items can be found.

3. Leave good notes.

Set aside a folder with important information for the heirs, such as names, numbers, and locations of accounts, as well as names and contact information for attorneys, accountants and financial advisers. This is especially important since bills are often paid online, eliminating once-helpful paper statements. Also let heirs know where to find your estate-planning documents. If you can’t find the will, and you don’t’ know who the trust and estate attorney is, you have a horrible situation.

4. Address digital assets.

Many people have digital assets, including email and online photos, that could be lost to heirs if proper provisions aren’t put in place. Terms might differ, so having appropriate documentation on file with each provider is important.

Cryptocurrency can also easily be lost if their owners don’t provide heirs a way to access these assets. So, people should make sure beneficiaries know how to access an account’s private keys – the secret numbers used to access cryptocurrency – as well as the kind of wallet and crypto type. One caveat: These private keys and other sensitive information shouldn’t be included in a will because it becomes public through the probate process and that puts the assets at risk.

5. Strive for conflict-avoidance.

People who have specific reasons for dividing assets or roles unevenly should prepare a letter that explains their thought process, which can help mitigate the potential for future conflicts. For example, clarify that you named your daughter as executor because she lives locally, but that you want all your children to work together to settle the estate. Or, if you’re leaving the younger of three $100,000 more than the others, explain why. This extra step can mean the difference between harmony and acrimony amount your peers.

The thing that’s most likely to cause the estate process to dissolve into something horrible is acrimony among the children. If you want to make things easy for your kids, if there’s anything that could be misinterpreted, explain it to them so they’re not fighting about it.

Prepare a draft of your estate plan and show it to your adult children in advance and explain your reasons for your distributions to avoid conflicts later on.

Call the “Trust Doctor,” W. Bailey Smith, now. He has created over 8,000 trusts. (949) 833 – 8891.