Tighten Up Those Loose Ends in Your Estate Plan

Loose ends in estate planning can lead to lost opportunities, stress, last-minute fixes or—worst of all—failing to designate money to family, friends and charities. This can have a severe impact on your estate.

Kiplinger’s recent article, “5 Simple Steps to Decrease Your Estate Costs,” offers some steps to minimize your future estate costs. You should speak with your estate planning attorney if you haven’t already.

1. Update your beneficiaries. When you pass away, some of your estate may not pass by your wil because retirement plans, life insurance and transfer on death (TOD) accounts go directly to your beneficiary. For example, if you name your sister as the TOD beneficiary of your bank account, she needs to only give the bank a copy of your death certificate for the funds to be transferred without probate. It’s the same for your IRA or life insurance policy.
2. Cash in any physical bonds and stock certificates. Physical securities and government bonds are all too often lost or forgotten—they can be left to mature without paying any more income. With a stock certificate, the stock may have split or paid dividends that weren’t collected properly. Unfortunately, these assets can appear after probate has been settled, which can result in the estate being reopened. Turn in stock certificates and keep them in electronic format.
3. Review property deeds. If you just had your estate planning attorney draft a trust without changing the deed to your real estate to reflect ownership by that trust, most states would not let the real estate pass through your trust. Instead, it will pass through your will and probate when you die. The results of this can be pricey. A trustee can list the house for sale within hours of your passing, but an executor of your will must first collect documents and procure family signatures to begin the probate process, then apply to the court and—in some states—even get court permission to sell the house. You’ll have wasted thousands of dollars paying for real estate taxes, utilities and other carrying costs.
4. Consolidate your accounts. Too many accounts mean more work and more expenses. Consider keeping fewer, larger accounts. Leaving a distant nephew $500 in your will may cost you more than that to deliver it to him. Keep just a few, larger bequests in your will and use TOD accounts for smaller bequests.
5. Keep track of your family. Small families should name all of their nearest relatives because many states require a list of heirs under a will, despite certain family members not getting anything. For example, if a widow has no children but has 20 nieces and nephews living throughout the country, these relatives will all have to be found if she leaves any property to be distributed under probate. The costs for finding these folks may eat up all of her estate. Keeping track of family members and accounts will allow your estate to avoid paying extra expenses.

Reference: Kiplinger (July 2016) “5 Simple Steps to Decrease Your Estate Costs”