1. Make (or update) your will.
Simply put, you need a will. Without a will, you are said to have died “intestate”, meaning your estate must go through the probate court where an administrator is appointed to distribute your assets according to your state’s law. The result–a lenghty, costly process that often does not go the way you would have liked it to go.
Even if you have a will, it must be up to date. Many people say they did a will 20 years ago, but lives change, finances change, loved ones leave us and new loved ones join us, and on and on. These types of changes, often require updating a will. Review your will and make sure it reflects your life now.
2. Check your beneficiaries
Check your retirement accounts (IRAs, 401ks, etc.) and insurance accounts (life insurance, etc.). Confirm that the individuals named as beneficiaries are relevant to your life now and not an ex-spouse or deceased relative. You will also want to name contingent beneficiaries or “back up beneficiaries”. Contingent beneficiaries are critical in the event your primary beneficiaries die before you, and you never update the forms. Never leave beneficiary sections blank, this can cause the account to be distributed in accordance with your state’s laws and not how you intended. Do not name minor beneficiaries. Most states place restrictions on minors, and a court most likely will appoint a guardian to handle the funds. Instead, use trusts for beneficiaries who are minors.
3. Check your bank accounts & brokerage accounts
Naming someone on your banking and brokerage accounts may provide you with flexibility and peace of mind that someone can help you if needed but it often creates a joint ownership of the account, giving your co-owner (and all their creditors) full access to your money. Instead name beneficiaries or ask for and complete Transfer on Death (TOD) form or Paid on Death (POD) form.
4. Make (or update) your powers of attorney.
Wills (and trusts) allow you to dictate how your property is distributed after you die. But what happens if you become incapacitated? The answer: powers of attorneys. And no estate plan is complete without them. Powers of attorney allow you to appoint trusted individuals to make personal, financial, and medical decisions for you if you are unable to do so. (Ancillary probate documents). If you already have these, review them and make sure they reflect your life now.
5. Organize and store your information
Gather and organize important information in a way that will help your family handle your affairs in the case of incapacity or death. Be sure to keep a record of important account numbers, passwords, security questions and other account accessibility information. You can structure the information any way you like but be sure it is a clear and easily accessible system for your family.
Once you have everything in order be sure to store your information and documents in a safe and secure place. You might even consider scanning everything and keeping digital copies of everything. Finally, be sure to discuss your new records with those closest to you. Your careful work will not help unless they know where to find important information and documents when the time comes.