Three Ways to Make Life Easier  

for your Family and Loved Ones

1. Create an Estate Plan

An estate plan can include a living trust as well as other important documents which can make life easier for your family and surviving loved ones when you die. None of us wants to think about our own mortality but the reality is it will happen to all of us and when it does, we can make a plan so our family and loved ones aren't left trying to put together the pieces left behind.

A living trust can distribute all your assets in a specific plan which eliminates fighting among likely beneficiaries, and it avoids probate. A living trust can also establish a separate trust for the management of assets left to minors. An estate plan can also include the establishment of a variety of trusts to provide guidance and management of assets for the benefit of others, such as a special needs trust for surviving loved ones who may depend on needs based government benefits. An estate plan can also provide a plan for guardianship of minor children or vulnerable adults for whom the testator is responsible.

2. Talk to your Family about your Plans

While we would all like to think our family and friends would never fight with each other in the wake of our death, the sad reality is that people react in very unpredictable ways to death and otherwise harmonious families can be torn apart in grief. Even if you leave a detailed estate plan distributing all your assets, people can challenge the trust or will.

If family members feel they have been unfairly or inadvertently slighted, they may react by filing a challenge to the estate planning documents. A challenge can delay the distribution of property and assets to all beneficiaries and can slow the payment of creditors of the estate. Not to mention the out-of-control costs and stress of litigation! A will or trust can be challenged based on undue influence, mental incapacity and other specific reasons allowed under law. People who don't understand the distributions or who think the distributions are wrong may assume a person did not have the required mental capacity to make the decisions. A potential beneficiary may also assume someone must have influenced you to create the trust or will.

Simply talking to family members about your decisions and letting them know why you are leaving certain assets to some and not to others can clarify any misunderstandings. If you don't want to talk to your family members before you die, you can use a letter to explain why assets are distributed in a certain way. Sometimes, an explanation can be included as part of the trust or will itself. The more transparent you can be, the less likely people are to challenge the trust or will.

3.  Get your Paperwork in Order

When you die your personal representative will be responsible for pulling together all your paperwork. The personal representative (sometimes referred to as your Executor or Trustee, depending on the context) will have to inform all your creditors that you have died and will have to settle debts. A personal representative must verify which debts are legitimate and which debts are misrepresented or wrong.

A personal representative must also distribute assets and it is common for an individual to have assets not mentioned in the estate planning documents. Most individuals continue to receive assets and income following the drafting of a will or trust and the personal representative must account for all property of the deceased.

The more organized your documents are, the easier it will be for the personal representative to pull everything together. You should keep an inventory of financial accounts along with passwords, account numbers and balances. The inventory should be updated every six months to a year in order to keep it current. It should be kept in a safe place with other important documents. You do not want that kind of information falling into the wrong hands.

Everyone should also keep an inventory of debts listing who the creditor is, how much is owed, and the terms of the loan or credit. The last inventory is an inventory of valuable or sentimental property. You can make a list of personal property and update it as you wish. If you keep a list of personal property along with the names of who you would like to receive the property, you should destroy any prior lists each time you make a new list and the list should be signed and dated. Some living trusts specifically allow for such lists to be treated as a trust amendment. In that case, your list should be kept with your original trust.

A qualified estate planning lawyer can help you with all these steps and make sure you are prepared and your family and loved ones will have more peace when you are gone.

SIDE BAR

Planning for Transferring Access to Digital Accounts

In 2012 BMO (Bank of Montreal) Retirement Institute issued a report on trends in North America. One of the trends is the increase in the use of social media, computers, and online banking. They found that while 61% of older individuals use the Internet for banking or other financial affairs, 57% of those individuals have not made a plan for passing information which would allow beneficiaries, or even the personal representative access to those accounts. Many financial institutions are getting rid of all paper statements and the only way to access financial information may be from online access.

Talk to your estate planning lawyer about creating a plan for allowing a personal representative to access all your online accounts when you are gone.