You beat the odds and got your estate planning done, now what?
The foundation of an estate plan is without a doubt the documents. Once you have received your estate planning documents, here are some tips and tricks to help your loved ones through a complicated and stressful time.
1. Send copies of all documents to your financial planner.
Your financial planner knows where all of your accounts are and can be a great person to guide your surviving spouse or your loved ones after you are gone. Your financial planner will also likely need a copy of the documents to confirm that your beneficiary designations correctly reflect the choices you made in your estate documents. Oftentimes, the financial planner quarterbacks the estate administration process for the survivors, and with access to the documents, he or she can provide copies of health care directives and power of attorneys to the named fiduciaries.
You can also send copies of your documents to any of the people named in them. The person (or people) named in your Advance Health Care Directive should know that they are able to make health care decisions for you if you are incapacitated, and will want to have a copy of that authorization digitally so they can print it out in a case of emergency. The named executor or co-executors must know where the original will is located, because without an original will, probate becomes very difficult and expensive. As a side note, do not put your will in a safe deposit box at your bank. More often than not, this results in the safe deposit box having to be drilled out, which is very expensive. Even a safe in your house can be hard for your executor to access. I tell clients that it is more important that the executor be able to find the documents than that the documents be safe. If your house burns down, we can always sign new documents. In the extremely uncommon case that something happened to the documents and you at the same time, an attorney can almost always probate a copy of the will.
2. Confirm that Taxable Accounts are titled correctly and Beneficiary Designations are updated.
If you sign your estate planning documents but don’t correctly title your accounts and update your beneficiary designations, you may have wasted your time and money (and caused an even larger problem). Account Titles and Beneficiary Designations take precedence over anything written in your will. If you have a joint checking account from high school with your mom and you pass away, your mom is going to get all of the money in that account while your spouse will get none (spousal elective share is a topic for another day). It’s the same story for life insurance beneficiaries. Your husband (or wife) is not going to be pleased when he or she finds out that your sister is getting all of the funds in your IRA because you forgot to update the primary beneficiary after you got married. It is also imperative to make sure that no funds are left to minor children, resulting in an expensive and time-consuming legal guardianship. Finally, you need to confirm that the deed for your house shows that you and your spouse own the property as tenants by the entirety. In many cases, if all accounts are correctly titled and beneficiaries are correctly designated, a surviving spouse will avoid the moderately burdensome process of probating a will.
3. Write a side letter.
Your Last Will and Testament becomes a public document once it is filed with the Court at the beginning of the probate process. The will is also mailed to all of the named beneficiaries and all of your heirs at law. To avoid broadcasting personal instructions for guardians and trustees to anyone with access to the Court’s public records, you can draft a side letter. A side letter is simply a letter that you write (handwritten or printed) and give personal instructions to guardians and trustees about how to raise your kids and how to administer trusts for your kids (how strict or lenient you would like your trustee to be about distributing funds). A side letter is also a good place to include instructions about end of life preferences (to add more personal direction than Living Will) and burial or funeral instructions. You should keep a copy of the side letter with your original estate documents and share a copy with the guardians, trustees and other fiduciaries.
4. Aggregate financial accounts and passwords using apps.
A lot of financial planners have an online “vault” where you can connect all of your external accounts to automatically track all of your assets. When you keep all of this information in one place, your financial planner (or anyone with the password to your vault) can easily find all of your accounts. The number one stressor for most executors: finding all of the accounts of the decedent. Your financial planner will be able to work with the executor to confirm the locations and balances of all of the accounts, and can reset the password to allow access to the appointed executor if necessary. If your financial planner doesn’t currently offer this option, you can use Personal Capital or Mint (but expect a lot of calls from people trying to manage your money).
In practice, the most helpful information your executor could have is probably access to all of your passwords. There are tons of security issues with using the same password for every account or listing all of your usernames and passwords on a spreadsheet. A better option is to use a password aggregator app like LastPass or 1Password. These apps are free and allow you to chose a master password for access to the app. Once you log into the app, each time you enter a password on a website the app will save the username and password in its vault for later use. Every time you visit a website where the password has previously been saved to the vault, you will see an option to autofill the username and password.
If your executor can gain access to your password aggregator, he or she can immediately log in to your financial planner’s vault (or Personal Capital or Mint) to 1) find all of your financial accounts, 2) disconnect all services like cable and internet, and 3) access email or social media. Although your executor or attorney-in-fact likely has the legal right to access your social media and other digital accounts, it is much easier for that person to have the password rather than wait on a large social media company to grant them access. A hard copy list of usernames and passwords can be helpful (although less secure), but a digitally stored list makes sure that all passwords are up-to-date and easily accessible for your executor. You will have to determine your comfort level with a password aggregator, but the convenience may outweigh security concerns.
5. Review your estate planning documents annually.
You should take a quick peek at your estate documents once a year. You might find that you feel your parents are now too old to be the guardians of your kids, or you may want a different person to make your health care decisions for you if your spouse is unable. Life changes, and it’s very simple to make small alterations to the documents.
Estate Planning is not complete when you receive the bound copy of your documents. Make sure that the right people have access to the necessary information to make sure that things run smoothly in case something unexpected happens. You can find the form I provide to my clients titled: Being Prepared For The Unexpected here. It’s a great place to compile all of this information and you can slide the document into your estate planning packet. If your executor sees this document, he or she will then know how to find everything they need in case the unexpected happens.
Warner Jones is an estate planning attorney in Nashville, Tennessee. He has an online solution called “Documents Ready” that allows busy families to complete their estate plan with only one meeting for a flat fee at estateplanningtn.com. You can reach Warner at firstname.lastname@example.org.
*This does not constitute legal advice, and Carter Shelton Jones, PLC is not responsible for any damages related to use of third party applications. Warner Jones andCarter Shelton Jones, PLC are not associated with any of the applications listed herein, nor do they receive any compensation from them.