There are two key things to do to make your estate simpler to handle. The first is what we do: prepare good estate planning documents and keep them up to date. Revocable living trusts and wills do not become invalid because of the passage of time; however, they should be reviewed periodically to make sure that changed circumstances do not require revisions to the documents. We recommend that you review your documents in case of major life events or every five years. If the documents still meet your needs, there is no need to change them.
Powers of attorney, however, become stale and harder to enforce, so we recommend that they be re-executed every five years, even if there are no change to them.
The second major way to simplify your estate is to simplify your financial affairs. Your estate will be harder to handle if you have lots of different assets, use many different financial institutions, and you do not use professional help in managing assets or preparing tax returns. If you are the source of all information, how is your executor going to know where your assets are and how to handle your affairs?
An estate is simpler to handle if business affairs are simplified. You might have had good reason at one time to have eight different bank accounts at eight different financial institutions, but can you consolidate them now? You might have excellently handled your investments yourself through self-managed accounts at a low-cost broker, but those accounts are much more difficult to close and transition, so would it be advisable for you to move your accounts to a full service financial advisory firm who can aid your family to continue to invest your assets well? You might have always prepared your tax returns, but how easy will it be for your family to do so? It makes it much easier if you are using a certified public account to prepare your tax returns, and that company already has your financial information which will greatly speed and ease the process of handling your final tax returns.
A simple way to think about this is to ask yourself the question – who knows how to do this other than me? If you do everything yourself, and you are not available to ask, you are making your estate much more difficult for someone else to handle. Planning for the possibility of incapacity and the inevitability of death includes beginning to rely on other people to help you with your financial affairs. That can be family, CPAs, or Certified Financial Planners. Regardless of who you enlist, the more you rely on others, the less difficult your estate will be.
One of the great benefits of retirement is to have fewer things to think about, so think about your retirement as not only retiring from your employment or your profession or your business, but also retiring from handling your taxes, retire from handling your investments, and retire from handling your recordkeeping. Believe me, your family will thank you.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
