Thinking about the end of your life is difficult and talking about it may be even more uncomfortable. But discussing your or your parents end-of-life plans and intentions with your family may be an important part of estate planning, make them more familiar with these plans and help assure the transfer of assets without legal complications.
Estate planning can take place at any age but the earlier the better. As you engage your family in this process, for yours or their estates, remember these points.
Positive aspects
The conversation is premised around the unpleasant subject of death. But planning helps assure the transfer of property and may reduce the tax liability for heirs.
In conversations, make clear that an estate plan may help assure that families will receive property with less trouble and confusion. Planning and documents can also provide piece of mind for you and guidance for your family that funeral and memorial plans, charitable giving, and transfer of assets are properly carried out.
Transparency
You should be honest and openly discuss your wishes on estate distribution during your life and afterwards.
Do not assume that family members will not engage in disputes over estates. Discuss clear expectations during your planning. This will also help assure that family members do not have to face any ambiguities about your wishes and assure that they are carried out.
Trustees and executors
Executors and trustees have special legal duties and responsibilities. An executor who will carry out the wishes in your will and distribute your estate should be organized and thorough. Trustees who administer trust assets should be competent and understand finances.
Executors should be informed where assets, important documents, and other important information, such as account and internet passwords, are located. Otherwise, executors may face obstacles exercising their duties.
Beneficiaries
Typically, trusts are named as beneficiaries of an IRA account when children are young. But this may pose problems when they become adults because that asset is immediately taxed before its distribution to beneficiaries. Instead, consider selecting family members as direct beneficiaries.
Transfer on death designations for individual accounts should be considered. These allow a parent or spouse to name beneficiaries for accounts and helps prevent these assets from undergoing the more lengthy and costly probate.
Estate plans, especially beneficiary designations, should be consistently reviewed and updated. Attorneys can assist with this planning and prepare the necessary estate documents.