We believe smart financial planning should go beyond your working and retirement years to include what you leave behind for the people and causes you care about most. Below we provide some simple yet critical steps to ensure your final wishes are documented to make the inheritance of your estate a smoother process.
If you have any questions about converting or assigning your estate accounts, please contact your financial advisor or an accounting professional.
Legal Documentation
First and foremost, ensure you have a current will, including assigning power of attorney. We often see people create a will in their early adult life and neglect to update it as their financial situation, family structure and values change. Ensure updates to your will are done in a timely fashion and advise your executor(s) and/or beneficiaries where the document is kept.
Your will is a legal document that is written factually. If you wish to include additional reasons or sentiments, consider inserting a statement or letter explaining your wishes.
Executors
When choosing to name an executor, consider their capacity to fulfill the role. Depending on the details of your estate, the people in this position may be taking on a time-consuming and complicated responsibility. Choosing an executor that understands your values and reasoning behind your final wishes can also make the process easier on those affected while also ensuring your intentions are carried out.
You can list individuals and/or a trust company in a combination of as many executors as you’d like. We recommend a minimum of two but caution that too many executors can lead to unnecessary delays or differences in opinion while too few could leave no one to execute if someone denies or is unable.
Joint Financial Accounts
After you pass, your day-to-day bills and expenses continue. For this reason, it’s recommended to have someone named on your bank accounts. Set up an appointment with your financial institution to create a new joint account or add a person’s access. You can document who has access to your accounts and for what purposes the accounts are to be used while your will is probated and include this information with your final wishes.
Life Insurance
Life insurance is a financial tool that can help offset final costs on your estate, such as tax bills. Insurance could help offset the inheritance of an asset subject to a capital gains tax. While organizing your affairs, consider if assets have increased in value and how they may be taxed to their recipients on your death. This information can help you decide if assets should be assigned or liquidated earlier.
Insurance can also provide a source of income to beneficiaries. If you are still working and don’t have sufficient financial assets to support your heirs, life insurance can help bridge the gap in the unfortunate event of your passing.
Trust Accounts
Consider creating a trust account or requesting one is opened if you have beneficiaries to your estate who are minors or are unable to responsibly manage their inheritance. You can set parameters around trust accounts, such as payment frequency or minimum ages for a benefactor to receive funds. Taxation and fees for trust accounts depend on the details and specific tax advice is recommended if using them.
Here at McNabb Lucuk LLP, our experience and advice in personal estate planning can make the difference between leaving a legacy or a burden on those you love. Documenting your final wishes and updating them regularly is not only smart estate planning but your heirs will thank you for making one of life’s most difficult times just a bit smoother.