Ask yourself this question: Would my family or loved ones know how to handle my care and financial affairs if I die or become incapacitated? The question might seem daunting, but planning for death and incapacity is an act of love and foresight that brings peace of mind to your family. By taking proactive steps today, you are providing your family with a road map to follow your wishes during emotional and challenging times.
Planning for death and incapacity is about taking control of your legacy and providing clear instructions to guide your loved ones. The practical benefits of being prepared far outweigh the discomfort of thinking about death and incapacity. Your clear instructions and wishes can prevent any potential disputes and can help your family move forward. Here are some important practical planning steps to take:
Creating a Comprehensive Estate Plan: Every estate plan should include several key documents including a will, a durable power of attorney, an advance healthcare directive, and potentially a revocable trust. Each document serves a specific purpose in safeguarding your interests, and in providing guidance to those you trust. Among other things, a proper plan allows your family to take care of you according to your wishes, and to ensure the transfer of your assets without the need for court intervention after death.
Reviewing Beneficiary Designations: It is very important to regularly check and update the beneficiary designations on your personal accounts, which are in your name, such as retirement plans and bank accounts. After your death, these designations will override any instructions in your other estate planning documents, such as in your will. By presenting certain documentation to the institution, including a death certificate, the asset will be transferred to the beneficiary you have designated.
Creating Master Lists: Another essential planning tool is to create certain master lists. Create a detailed list of your assets (including bank accounts, investment accounts, real estate, valuable personal property, and digital assets) and your liabilities. You may wish to keep the account numbers in a separate document. A master list of assets and obligations ensures that your executor (or trustee) can efficiently manage and distribute your estate. Also, create a list of the important people in your life with their contact information. This list would include anyone you have named in your estate planning documents, and the professionals in your life such as your physicians, tax preparer, financial advisor and estate planning attorney.
Communication is Key: Talk to your family and your loved ones about your wishes. It is important to communicate your wishes and intentions with the people you have entrusted with the handling of your care and your assets. To the extent you feel comfortable, discuss your plan details with your loved ones and explain your decisions. Open and honest communications, albeit uncomfortable at times, can help avoid misunderstandings in the future.
A Positive Legacy: Ultimately, planning for death and incapacity is about ensuring you and your loved ones are cared for, your assets are distributed according to your wishes, and your values are honored. Instead of viewing it as an unpleasant task, embrace the opportunity to plan for the future, knowing that you are providing a great gift: peace of mind for yourself and your loved ones.
Information in this article is intended for educational purposes only. It is not, nor should it be considered as legal or tax advice, and should not be relied upon as such. You should consult your attorney or other tax professional to determine what is best for your individual needs.
Copyright by Gita K. Nassiri, Esq. MBT, CPA.