Broker Check

Organizing Your Finances Before You Pass Away

| March 04, 2017
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One of the areas that I get a lot of questions from clients is: “how can I organize my finances so when I pass away, I can smoothly pass my estate to my children?”  Similarly, “my parents are getting older and I’m wondering what I should be talking to them about or doing to make end of life decisions easier?”


First, this is not an easy topic.  No one really likes thinking about or planning for the end of their life or their parents' lives.  Talking about estate transfer end of life decisions can be harder still.  But failing to talk about these topics because they are awkward or difficult can have negative repercussions.


Here are some ways you can organize your finances for estate transfer and some topics to discuss with your loved ones:


  • Prepare a list of all accounts, insurance policies, account numbers, and account providers in one place where heirs can find them. If you have a will, a durable power of attorney, and health care directive, it must be accessible and in a known location.  If these documents are securely locked, heirs will need to know where the key can be located

  • If you have valuable property that is hidden, a trusted loved one needs to know where to find it. You might chuckle at this, but I remember a cover story on Fortune magazine a few years back that featured a guy burying gold in a secret location in his back yard.  Um… no.

  • Many of us have digital assets such as photos, family recipes, family videos, personal emails and digital music. We have digital business assets like electronic statements, tax returns and business documents that are only available electronically.  We own smart phones, tablets, and computers that are password protected.  Our loved ones need a way to access these assets and devices if we are gone or incapacitated.  Consider printing an annual statement for each of your accounts and insurance policies, having a list of devices, ID’s and passwords that is accessible to a trusted loved one.  This may be the only way to retrieve your digital legacy.  The ID’s and passwords must also be kept current and in a known location.  Leave instructions for what you would like done with your social media accounts or blog.

  • Make sure your bank, brokerage, and retirement accounts have the correct beneficiaries listed. For example, if you have an IRA, a brokerage account, a mutual fund account, or a bank account, you can name primary and contingent beneficiaries on the account.  Beneficiaries are not limited to retirement accounts only.  You can also use a Transfer on Death for non-retirement investments or Payable on Death registration for non-retirement bank accounts as well.  A common mistake that I see are accounts with no beneficiaries, accounts with unintended beneficiaries (i.e. ex-spouse), or accounts that don’t list all intended beneficiaries (i.e. first child listed but not second).  Keep in mind, that if a beneficiary is listed on an account, this supersedes the will.  This means the account will be transferred to the listed beneficiaries regardless of what the will may say.

  • Some clients have joint ownership of property they own. For example, many clients own their home as joint tenants with rights of survivorship along with their spouse.  In the event one spouse passes away, with joint tenants’ rights of survivorship, the surviving spouse then receives a full interest in the property.  Washington state, where many of my clients live, is a community property state.  That means most assets during the marriage are automatically owned 50/50 by each spouse. Changing ownership to add a child or multiple children can have a variety of advantages and disadvantages and should be approached with great care and the advice of an attorney.  However, this may be a good approach especially in the case of dementia or memory loss.

  • Make sure you have an updated will that reflects your current wishes and your intended executor. A will can also include a trust to help young children handle an inheritance.  A will dictates how property will be transferred in the event of your death if the property does not have a beneficiary, a joint owner, or a community property interest.  For example, if an unmarried individual dies with a car owned in their name, the will could direct who will receive the car after the owner passes away.  Using the will to bequeath certain property can be a good idea.  You might even ask heirs if there is particular property that they would like to have after you’re gone.  When my mother passed away, my family mourned her loss and her assets passed mainly to my father. Mom used to like to entertain and she had special dishware that she always used when family and friends came over to share a meal.  When she died, it was not clear who would receive this sentimental dishware and dad did not want to keep it. Though it was not particularly valuable, my brothers and I all wanted it because it had such fond memories for us all.  One thing that could have been done is that mom could have bequeathed her dishware to one of us that communicated that desire to her while she was alive.  This brings up my next main point, communication.

  • It is a good idea to communicate with your loved ones about your intentions and preferences. For example, a health care directive or living will, which is a typical document that accompanies a will can lay out your medical preferences in the event you are incapacitated such as, “I do not wish to be kept on life support”.  But communication can include other topics such as, “I do not want to go into a nursing home” or “I wish to be cremated”.  Let’s face it, none of us want to go into a nursing home, but none of us want to be a burden on our families either.  If home health care is the intended solution, there should be a discussion about how this will be financed and where it will take place.  Is the home ready for someone with mobility problems or memory issues?  Who will be the primary caregiver?  How will they be relieved for part of the time?

Hopefully this has given you a few things to think about whether you have aging parents or you are thinking about your own estate.  Please contact me with questions.

All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful. Past performance is not an indication or guarantee of future results

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