This is not the easiest column to write, but is in many respects perhaps the most important one. There are two compelling reasons to read this; No. 1: Some day you may need to deal with the loss of a loved one and No. 2: Some day a loved one will deal with the loss of you. No, not the most popular subject, but necessary all the same.
As if it isn’t enough dealing with grief, if you are in the position to settle an estate that hasn’t been well planned, it is generally overwhelming and can leave room for errors that are costly and/or not in accordance with the loved ones wishes – no matter which side of the table you are on.
The following is a general checklist to help get you started. Planning is the last gift you can bequeath, so do your best to make it good. Reach out for help from trusted friends, family and advisors if it feels too awkward or intimidating.
Ideally, these are the things that will be in order.
A list of Important Documents and their Locations
This could include wills, trusts, insurance policies (life, long term care, disability, health, auto), employee benefits packages, bank and investment statements, retirement accounts, birth, marriage, and death certificates, Social Security information, safe deposit box (bank and key location), Veteran’s Administration records, DMV records and pre-arranged burial plans.
Note: In some cases, family members may be eligible for Social Security survivor’s benefits. Additionally, eligible surviving spouse and children may collect a one-time death payment of $255. For further information, visit socialsecurity.gov. In many cases retirement accounts can be treated as “inherited” and put in the name of a beneficiary. Doing so may prevent unwanted and expensive tax treatment. Be sure to consult with an advisor to know your options.
A list of professional advisors with contact information
This could include an attorney, tax professional, financial advisor, insurance agents and/or bankers.
Assets
Your “executor” – the person responsible for settling your affairs – will be responsible for distributing all of your assets (otherwise known as settling your estate). Assets may include bank and retirement accounts, real estate (homes and investment properties), personal property (vehicles, jewelry, collectibles and household items) and life insurance proceeds. Your executor will first pay off your debts and then any remaining assets will be distributed to heirs. Ideally, you have prepared a will so the distributions to your heirs are as you would have wished.
Liabilities
Your executor will need to ensure your debts are paid. A current list of creditor’s contact information, balances and monthly payments will be needed. Creditors include: mortgage and credit card companies, doctors and utilities (phone, PG&E, cable, Internet), etc.
Creditors should be notified as soon as practical to ensure no unauthorized transactions occur and to prevent threat of identity theft. An efficient way to help make sure no one is overlooked is to notify the three main credit reporting agencies.
Beneficiaries
This one is a hot button for me. Too many times I have seen a failure to name and/or update beneficiaries. Regular updates of beneficiaries are vital; triggering events include but are not limited to birth, death, marriage, divorce, job change or change of heart. Common places where beneficiaries are directly named include life insurance policies, retirement and bank accounts.
Note: Many life insurance policies and retirement accounts are paid directly to the beneficiary. If a beneficiary is not named these funds can default to your estate, and as such be subject to claims of debtors. If there is more debt than there are assets, it is possible that money left directly to loved ones is re-directed to pay debts. Consider today’s environment of upside-down mortgages, it can happen quickly. Please take the time to ensure your beneficiaries are properly named; it can avoid a lot of heartache down the road.
Income Sources
Your executor will need this information so sources can be notified immediately; many sources like Social Security and pensions will cease upon death. If payments are not stopped in time, repayment will be required.
Bill Payment
Are bills paid by check, online or automatically by bank draft? Without this information bills may easily be overlooked or, worse yet, overpaid and difficult to recover.
An unpleasant task? Yes. A complicated world? Yes. If this all seems a little overwhelming to you, consider how the survivor who is responsible for your estate settlement will feel – while grieving. This is the last gift you can give, do your best to make it good.
To assist in this important project, our office has a detailed checklist available; please feel free to call for a complimentary copy.
