by Melissa Best
Making decisions about what happens when you die may feel negative and odious, but being organized at death is the most priceless gift you can leave your family.
It will save your family and your executor or Personal Representative (PR) an enormous amount of time and money, simplifying things at a difficult time. Being organized is also the best way to reduce family friction when emotions are running high.
For a bird’s eye view of estate organization, here are the Top 10 To Do’s and Top 10 NOT To Do’s:
Top 10 To Do’s:
1. Make your preferences for end of life arrangements known to your family. Discuss them, write them down or organize it all in advance with pre-paid funeral arrangements.
2. Use an experienced estate lawyer to draw up a Will, Enduring Power of Attorney and other estate documents. Tell your family and your executor (PR) where these documents are located should they suddenly need to use them.
3. Choose your executor (PR) wisely. If you appoint more than one person, be sure they are all qualified to do the job and can work well together. In the absence of family or friends to take on the role, locate an experienced professional executor such as an estate lawyer or a bank with an established estate department.
4. Carefully select guardians for minor children or disabled dependents. Have a complete discussion with them in advance, document your preferences for care and explain what financial support is in place.
5. Communicate with your executor (PR) regularly. Provide them with a copy of your most recent Will and discuss all aspects of your estate, so there are no surprises.
6. Create a record locator to list where all your most important documents and information can be found, to give your family and executor (PR) quick access when the time comes.
7. Create a contacts list with complete information on your executor(s) (PRs), beneficiaries, family members, friends, lawyer, accountant, investment advisor, life insurance professional, funeral home, and other regular service providers. All of these people will need to be contacted when you pass away. Creating and regularly updating this list will make things much quicker for your family and executor (PR).
8. Create a complete list of your assets and liabilities. Update it when changes are made, such as selling a home, changing your investment advisor, acquiring a valuable piece of art, etc. Provide a complete Statement of Assets and Liabilities to your executor (PR) periodically so when the time comes, they’ll know what’s involved and where it is located.
9. Research and record the costs of your assets. It may be painful to get caught up on this accounting work in the short run, but once it’s done, updating your costs annually only takes a few minutes. The time you invest now will save your executor (PR) endless hours of frustrating work and save your estate a ton of money in accounting fees.
10. Stop procrastinating. Talk to your accountant, tax and estate lawyers about creating a plan that includes an updated Will and Enduring Power of Attorney. Use an estate organizer to fill in the blanks on everything else. It doesn’t all have to be done at once. Work away on it gradually, but just do it!
Top 10 NOT To Do’s:
1. Not having a current Will and Enduring Power of Attorney.
2. Using an informal Wills kit or making a handwritten Will to save money on legal fees. If not done properly, such Wills may be declared invalid by the Court, which may then deem that you died “intestate” (without a Will). Your estate will be distributed according to provincial or state rules of intestacy amongst a hierarchy of your family members, rather than according to your wishes. This can be a very time consuming process, creating a lot of stress for your family.
3. Naming all your children (to avoid leaving someone out) or others as executor (PR) when they either lack the administrative skills and financial knowledge to do the job or not be able to work with each other. Choosing the wrong executor (PR) may create friction and delay the entire estate settlement process.
4. Not asking permission before naming someone as your executor (PR) or guardian of your minor children or disabled dependents. Guardians need to be willing and able to take on this important responsibility.
5. Not creating a trust Will for minors, disabled dependents, spendthrifts and others who would struggle if they suddenly inherited a large sum of money.
6. Not organizing your Will to properly deal with your spouse from a second marriage, creating friction between the new spouse and the children of your first marriage.
7. Not keeping your executor (PR) informed by providing them with a copy of your current Will, documents locator, contact list, and Statement of Assets and Liabilities. When you die, your executor (PR) will be doing you a huge favor: do your best to make their job as easy as possible in advance.
8. Not keeping track of the costs of your assets. Trying to establish costs after someone dies is one of the worst jobs for an executor (PR). It will cost a small fortune in accounting fees, could result in a heavier tax burden and may delay the distribution of your assets. Stress all around.
9. Not dealing with contentious assets in advance, such as personal effects or the family cottage that have sentimental value. Disagreements over such assets after Mom and Dad are both gone can create permanent rifts amongst family members.
10. Being disorganized: setting your executor (PR) and family up for an unnecessarily complicated, lengthy estate administration, costing a ton of money in professional fees, and creating family friction when emotions are running high.
Estate planning can often times be a tedious and arduous task. As stated previously, being prepared is the best gift you can leave your family. Whether working with and advising your pre-planning clients, or taking on this task yourself, you owe it to yourself to know what pitfalls lie in your way. Your clients will look to your for advice, so lead by example. Have you affairs in order and you will be better prepared to provide the same guidance to your families. Time is precious, so it is never too late to start. You, your family, your clients, and your friends will be glad you did. FBA
Melissa Best MBA, CFA, TEP, is the President of QuickEstate Administrators Inc and creator of QuickEstateTM a comprehensive, online toolkit that makes the job of organizing or executing an estate faster, easier and cheaper with less risk. QuickEstate believes that funeral home pre-planning professionals play an important role in acquainting families with the importance of being organized, in all aspects, before death. You may visit her website, www.quickestate.ca. The US version of QuickEstate launches in October 2014.