Published on October 12, 2021
Giving Docs Founder and CEO Brantley Boyett shares six helpful tips for estate planning.
You’ve decided to write your Will — now what? As with most things in life, a little pre-planning is going to make the process easier. Pre-planning doesn’t have to be complicated or done in any certain way; you just need to spend some time organizing your thoughts about things like:
- What types of assets do you own and how much are they worth? Making a simple list with estimated values is fine.
- Are any of your assets titled jointly with someone else? Check your deeds, titles, or financial account statements if you are unsure.
- Who are the people you want to take care of in your Will? Make sure you have their legal names and preferred names handy.
- What charitable organizations have been important to you during your lifetime that you might want to leave a gift to in your Will? You should know their legal names, and taxpayer ID numbers.
2. Specific Gifts of Cash or Property
There may be specific property that you would like to give to specific people — for example, tangible personal property like the family china, jewelry, or other items with sentimental value. Items like these are the ones that can spark emotional family disagreements if there is no plan in place for how they should be distributed.
You may want to include items that are particularly valuable within the terms of your Will itself. However, if you have a long list of items, creating a list that is separate from your Will can give you the flexibility to update the list as often as you want without having to amend your Will. If you choose to make a list, also make sure there is an instruction in your Will that tells your personal representative to distribute your tangible personal property in accordance with the list you leave behind. Such a list is not technically part of your Will, and therefore is not enforceable by a court, but this can be a practical solution for a longer list of low-value items that your loved ones are unlikely to fight about.
You can also leave specific gifts of cash, real property, intellectual property, and digital assets through your Will.
3. Residual Estate Gifts
Once your specific gifts have been distributed, you should decide how you want the balance of your assets (called your “residual estate”) to be divided. This is usually accomplished by providing percentages of the residual estate to specific loved ones and/or charities. If you haven’t left any specific gifts, then your property will be distributed through your residual estate.
4. Know Which Assets Don’t Pass Through Your Will
A lot of our wealth these days is tied up in accounts that do not pass through our Will. Gifts you make through your Will do not include accounts that pass to a surviving joint owner, or that pass by beneficiary designation. The most common examples of these assets include:
- Life insurance
- Retirement accounts
- Some investment or bank accounts
When enrolling in a new retirement account or purchasing a new life insurance policy, you will be asked to complete a Beneficiary Designation form that will control who will receive those assets after your death. People often designate these beneficiaries quickly and don’t update them for very long periods of time, if ever. This can result in your estate not being distributed in the way you intend. Beneficiary Designations don’t follow the terms of your Will, and they are not changed automatically if your family situation changes. For example, if you designate your spouse as 100% beneficiary of your life insurance policy, and you and your spouse subsequently divorce, your spouse will still receive the proceeds of your life insurance if you pass away without updating your Beneficiary Designation.
Similarly, property that you own jointly with someone else as “joint tenants with rights of survivorship” will automatically pass to that surviving co-owner upon your death, and is not controlled by the terms of your Will. Common examples of this include:
- Real property
- Automobiles and boats
- Bank accounts
5. Appointing People to Help
Besides distributing your property, the other important function of your Will is to appoint people you trust to wrap up your affairs in accordance with your wishes. You will need to appoint a personal representative (also known as an executor) to complete the appropriate process in your state. A personal representative will usually handle things like:
- Filing your Will and initiating probate proceedings in your local court, if required
- Paying your final expenses and debts
- Locating and organizing your property, bank accounts, digital assets, etc.
- Hiring any necessary professional advisors, such as an attorney or accountant
- Filing your final tax returns
- Valuing, selling and distributing your assets according to the terms of your Will
In most states, your personal representative needs to be someone over the age of 18 who lives in your state.
If you have minor children, you can also use your Will to nominate a guardian to take care of them in the event their other legal parent predeceases you or is unable to care for them. Your children’s guardian will still need to ask a court to formally appoint them as guardian, but courts will normally follow the recommendations expressed in your Will in their determination of what is in the best interests of your minor children.
One of the most important steps in completing your Will is to communicate your wishes to your loved ones. It is especially important to talk to the people you are appointing to be your personal representative and the guardian of your children to ensure they are prepared to step in and help when the time comes. Your personal representative should also know where you are keeping the original signed copy of your Will so they can quickly and easily find it. Talking about your wishes can be a sensitive and uncomfortable topic for some people, and that is normal. But taking the time to have even a brief conversation with your loved ones can help prevent misunderstandings and surprises in the future.
More articles on estate planning:
Investing in Your Legacy
October is Estate Planning Month, Dare to Show Up