Preparing for your estate plan can be a lot of work. Not only do you have to decide who is going to do what when, you have to organize your affairs, so they can. To properly prepare your estate plan, especially a trust based estate plan, you need to gather asset information and make a list of everything you own.
Every bank account, investment account, IRA and retirement account should be itemized. Also to be included are all life insurance policies, annuities and every vehicle and parcel of real estate owned. If there are any stocks or bonds held directly and not in an account, they too have to be listed. Not only do the assets have to be listed, you need to gather documentation of them.
If you have a trust, all of this information is necessary to fully fund your trust. Fully funding your trust is critical in making your trust work and having the results that you intend, including avoiding probate and distributing assets in accordance with your wishes. Funding includes the proper titling of assets in the name of your trust or individual names and/or proper naming of your trust and/or individuals as beneficiaries on assets and accounts and as additional insureds on casualty and liability insurance policies.
Gathering this information is a lot of work and it’s your stuff. However, all of this information will have to be gathered eventually. You can do it now when you are alive and well, or it can be done by someone else later after your mental disability or death at much greater time and expense.
When we review client asset information, it is not uncommon for checking and saving accounts to be at three or four banks or credit unions. We often see each investment account, annuity and life insurance policy with a different financial advisor. Financial assets can be spread out among a dozen or more advisors or companies.
Keeping track of bank accounts, mutual funds and other investments can be a real chore. But it may not have seemed as difficult in years past. Keeping things organized so you can find things again when you need them was so much easier before and took a lot less time.
Now may be the time to simplify your financial life. How many checking or saving accounts do you really need? It may make sense to just have a few accounts at one bank or credit union. Is there any reason to still hold on to that $500 or $1,000 life insurance policy your parents bought for you when you were little? It might be less hassle to cash it in.
Consolidating your investment accounts with one trusted adviser will not only be easier for you, it will be easier for your successors in the event of your mental disability or death. Managing your rentals and other investment properties is becoming a real pain. Maybe it’s time to start selling them or having them professionally managed.
Simplifying and consolidating will assist you with staying in control while you are alive and well, providing for you and your loved ones in the event of your mental disability and giving what you have to whom you want when you want the way you want.
By: Matthew M. Wallace CPA, JD
Published edited in Savvy magazine: Simplify Your Financial Life