We collect and lose a lot of information about what we own. Do you know where your insurance policy, deeds, will, and all your bank account books - just to name a few - are? If you die, all these documents and more must be found and acted upon - or else your spouse and beneficiaries could lose their benefit! This brief retirement guide will help you account for the important items to sort into one location.
Part of estate planning is getting your documents in order - the sooner the better. It'll help you recognize what titling needs to be changed. Also, settling estates can be time consuming and costly and there is no need to put your beneficiaries through undo hardship. Knowing where documents are shortens the time to settle an estate and helps reduce costs. Start collecting them into one place or at least constructing a list of where they are and what should be done about them.
Retirement Guide for Listing Your Estate Planning Items
Wills and trusts
List your executor and trustees and update where needed. Let the beneficiaries as well as the executor/trustee know where a copy of the will/trust is located or give them a copy.
Review the titles to real property and cars and update if necessary. It's possible that the title on your real property is out of date for modern estate planning purposes. An attorney can review and explain and also be a good retirement guide for any questions you may have in the estate planning process.
Identify all checking, savings, brokerage accounts, and their titling. Make sure you've
registered transfer on death statements for easy transfer to your beneficiaries too. Many states have "transfer on death" rules that allow securities and even real estate to pass to the next generation without probate. Nolo Press, the famous self-help legal publisher has a retirement guide to various state statutes on their web site.
Pension and retirement programs(pension, IRAs, 401(k), ESOP, etc)
Record all employer-sponsored programs you're participating in. List who to contact and phone numbers. Estimate present value and the benefits each holds. Remember that the beneficiary on each plan is who receives the payoff and nothing in your will or trust matters. Advanced retirement guidance is to have all retirement accounts name a special trust (not your living trust) as beneficiary and have that trust specify the division.
Benefits due you or your spouse
Find and list if your spouse will be due any social security, medical or other benefits as your survivor. The social security administration has a retirement guide on their web site regarding survivor benefits. Also list any unions you have belong to or other states where you have lived as long forgotten benefits may be due you.
Tax and legal advice
Your estate planning should map out what passes to your wife and what goes to a trust with all tax consequences. You should identify who will be a suitable estate attorney for your affairs and suggestions on tax-related decisions. Most importantly is selected an appropriate trustee or executor to settle your affairs. Attorney Steve Leimberg has a good retirement guide on this and it should be available online.
Find and review all your policies - life, home, automobile - and give their contact information. Some of these may carry additional benefits in the event of your death.
Credit cards and other liabilities
List all your credit cards and debt obligations (mortgage, bank loans, etc.) with their outstanding balances. Give contacts and telephones. Some credit cards carry death benefits too. All credit cards will need to be cancelled so they don't continue to accumulate fees and interest charges.
When an individual dies, assets of the decedent may be transferred based on how their titled or a named beneficiary. For example, assets held as joint tenants with right of survivorship pass directly to the other joint owner. Similarly, IRA accounts pass directly to the named beneficiaries as do payable on death accounts, transfer on death property, and most life insurance and retirement benefits. For other assets that do not have a named beneficiary, an estate/trust Administration process is necessary. In the case of a person who dies with a will, that process is called probate and requires proceedings in probate court. In the case of a person dying with assets in a trust, then probate is avoided and the estate/trust administration duties fall to the successor trustee named in the trust, typically a family member.
It is the probate court's responsibility, as it is the successor trustee's in the case of a trust, to ensure the assets are collected, maintained, and distributed among the decedent's heirs, beneficiaries, and/or creditors according to the direction of the decedent as expressed through a will or the trust. This process is known as estate/trust administration of a decedent's estate.
After the death of an individual, an estate may be opened by any interested person filing an application to administer the estate. This is usually done by the executor, a family member named in the will. In the case of a trust, the estate/trust administration is handled privately, not involving the court and can often be accomplished in a matter of weeks, not months. That is one advantage of estate/trust administration with a trust--speed. The other advantage of estate/trust administration is privacy. While matters involving a will involve the court as explained above, these matters become public. Estate/trust administration handled when the decedent has a trust is handled privately by a family member or someone close to the family and there is no public record.
In both cases, will and trust, the estate/trust administration process involves the following steps:
Application for authority to administer the estate and admit the will to probate if one exists;
Appointment by the court of a fiduciary (in the case of a will);
Gathering assets and obtaining appraisals as required;
Filing the inventory in a timely manner;
Payment of creditors;
Filing of estate and income tax returns and payment of taxes, if any;
Distribution of remaining assets to beneficiaries;
Closing the estate by filing a final account or certificate of termination in a timely manner.
While it's usually the case that estates are closed once all assets are distributed, in the case of a trust, the estate/trust administration process can continue for years. For example, the decedent may have specified in his trust to have $20,000 distributed annually to his 20-year-old grandson. The would require the trustee to administer the trust over the next 60 years or so. While this is not a difficult job by the trustee, the desires of decedents who use trusts can be more involved and require estate/trust admininstartion over decades.
Note that the eatate/trust administration issues have no impact on estate taxes due. Whether the decedent has a trust or will, the same estate tax impact can be accomplished in the design of the documents. Avoiding probate does not mean avoiding estate taxes. Assets left in trust are subject to estate and inhertiance tax just as assets left through a will. Avoiding estate taxes requires that tax and estate planning be done well before death, coordinated by an experienced retirement advisor.
If a decedent has no will or trust, the estate/trust administration process is similar as if a will had existed. However, the State may decide on the distribution of certain assets because there is no documentation of desires from the deceased.
Financial advisors who can assist with estate planning - lead generation company
Great guide, thanks! I was wondering if you could do a post on living wills. I've been told I should start to set one up but I don't know much about wills vs living wills. Thanks.