Banking & Finance and Law

The importance of creating an estate road map for your heirs

October 31, 2019
Print
Text Size:
A A
Neil Kimball large
Neil Kimball. Courtesy Mika Meyers

After someone’s death, it is typically a time of grief, high emotion, fear of the unknown and confusion. A good estate plan can alleviate some of this.

Most of us want to leave our assets to our beneficiaries in a way that is helpful and organized and do not want to leave our estate in disarray. An estate plan usually involves a will, perhaps a trust, a durable power of attorney for financial decisions, and a designation of patient advocate (also known as a health care power of attorney) for making medical decisions when you are not able to make those decisions yourself.

An estate plan also involves making sure your assets are titled the right way and that beneficiary designations for various assets are coordinated with these documents to make sure that assets pass to your beneficiaries in the most effective and efficient manner. It also helps to leave these documents and information about your assets in one place that is easy to locate.

However, one additional step that you may want to consider is leaving a personalized letter of instructions to your spouse or other family members. The letter may explain what you intend for each of them and an explanation of why you left your estate the way you did in your documents. The letter also may guide them on what needs to be done following your death with respect to each of your assets.

Most of us leave a retirement plan, real estate, various bank and investment accounts, vehicles, tangible personal property and perhaps some employment benefits. The more assets one has, the more complex and overwhelming it can seem to their survivors.

A step-by-step instruction with headings regarding each asset is very helpful to keep your survivors organized. The letter can tell them who to contact with respect to each asset, and to let them know what they need to do and perhaps why they need to take that action.

For example, if you leave a retirement plan (401(k), 403(b), IRA, etc.), and your spouse survives you, he or she will need to know that they may need to roll that IRA over into an inherited spousal IRA and name beneficiaries.

You also may direct your spouse or children to the appropriate person at your work to claim certain life insurance or other employment benefits, to re-title your vehicles at the Secretary of State’s office, and to contact your financial planner and accountant with respect to your various accounts and tax obligations.

If you have more complicated assets such as a closely held business, there is even a greater need for guidance. You may want to let your beneficiaries know who to contact upon your death to make sure that the business keeps running smoothly and who to consult regarding the future of the business. You may even have ideas as to who would be a good prospect to buy the business or what may need to be done to prepare the business for sale.

While attorneys and accountants can provide you with a great deal of assistance in this effort, ultimately you know your business best and are in the best position to guide your family in the event of your death. You also can give the instructions a more personal touch. It is surprising how often business owners have detailed business plans for several contingencies, but often not what needs to be done upon their death. If you spend a good part of your life building a business to provide for you and your family, you should take the time to make sure that the value of the business does not quickly erode due to a lack of succession plan following your death.

The more clearly defined and detailed the instructions, the easier it will be for your beneficiaries. Certainly, you may have financial planners, accountants and other advisers who can assist them with each step. But leaving them an initial roadmap is helpful because it alleviates the stress and the fear of the unknown. If you think about it, creating a good estate plan and taking this extra step of leaving specific instructions is really an act of love and caring for the people you leave behind.