
What do you want to happen to your assets after you’re gone? According to a recent study, 68% of people surveyed don’t have a will.1 While their reasons for not having one varied, 40% of those surveyed said they didn’t have enough assets to need a will. Other reasons included a lack of knowledge or funds to create a will and simply putting it off because they didn’t want to think about it.
Source: Caring.com
But here’s the thing: Even the most basic financial planning can be impactful for your loved ones in the wake of your death. When someone passes away, just paying the bills can become a chore that’s worsened by grief. The last thing you want is for the power to be cut off or for long-term-care insurance on a surviving spouse to be stopped because you weren’t there to pay the bills.
Even if you’re single with no children, it’s important to consider where your assets and possessions will end up. If you pass away without a will, the state will decide how to distribute your belongings – including any physical property, investments and even pets.
Pre-planning can also head off disagreements or arguments over who gets what. So, how can you get started with planning for what happens when you die? Let’s break it down into four simple steps.
Some of the most effective pre-planning is simply letting your loved ones know where your assets are located and how to access relevant paperwork. It’s a good idea to develop a “financial fact sheet” listing your bank accounts, investments, pension, employer retirement plans, etc. It may also include details about property you own, outstanding debts and other relevant financial information.
Your financial fact sheet can be stored in a secure location, such as a safe deposit box or fireproof safe in your home. Let your loved ones know where the documents are kept, and make sure they know how to access them when necessary.
While your financial advisor can’t help you set up a will or trust or provide tax advice, they can work with an estate planning attorney and tax consultant to make sure your accounts are set up correctly. This combination of experience can help ensure your assets are transferred to beneficiaries directly and in the most tax-efficient manner. Should you decide to put investments or other assets into a trust, your financial advisor can also help make sure they are moved correctly and provide support for distributing the assets after you’re gone.
If you don’t have an estate planning attorney or tax professional, your financial advisor can likely refer you to someone they know. They can also provide support and advice for your surviving spouse, children or other beneficiaries to manage their inheritance.
You can’t take it with you. That’s why it’s important to write a will providing instructions on how you want your possessions to be distributed when you die. While many states assign all assets to a surviving spouse, this isn’t always automatic – and may even be problematic depending on your family situation.
Here’s a look at what might be included in a comprehensive estate plan:
It’s not always automatic that a spouse can make medical, legal or financial decisions on behalf of an incapacitated spouse, so it’s important to have this paperwork in order even if you’re married. It’s also important to review all of your estate planning documents regularly to make sure they’re up to date and aligned with your wishes.
When someone dies, there are a lot of decisions to make – and you can relieve some of the burden for your loved ones with funeral pre-planning. This might include details such as:
- Where you want to be buried (you might even pre-purchase a plot or headstone)
- Where to scatter your ashes if you want to be cremated
- The clothes you’d like to be buried in
- Favorite songs to play or verses/poems to be read at your services
- A preferred charity or organization to receive memorial contributions
Writing down these details may seem morbid at first, but thinking through your wishes can actually be a liberating experience. It also allows you to communicate your likes, dislikes and how you want to be remembered. Without this guidance, grieving loved ones must make these decisions on their own while navigating their own grief.
The best time to develop a plan – whether it’s retirement, long-term care or death – is well before you need it. It’s important to engage in end-of-life planning while you’re still in good health because the financial and legal complications can be onerous if you wait too long.
One of the best things you can do for your loved ones is to regularly review every plan, document, account and beneficiary designation to ensure they continue to reflect your wishes. These details tend to get lost in the wake of new marriages, blended families, the addition of new family members, divorce and death. That’s why it’s important to work with a financial advisor to help ensure your plan stays on track for the sake of your loved ones.
By submitting your personal information, you consent to be contacted by a financial professional regarding your financial strategy for retirement.