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Estate Planning: The Complete Guide for You and Your Family

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Estate Planning affects the entire family – what you should know to get it right, for all.

Death is hard on everyone but is made even harder when a family doesn’t coordinate, plan, and organize ahead of time.  Sometimes people don’t want their financial affairs to be known by family members.  Sometimes people just don’t like talking about death.  And sometimes people just procrastinate until it’s too late. Human beings are complex, relationships are complex, and the topic of money is complex.    Whatever the reason, we can all agree that the benefits of planning are significant for all involved. 

For some, the family dynamics and financial situation are pretty straight forward.  And for others, more support and guidance are required to get to the finish line.  We recognize that all situations are different and want to provide supports where help is needed.  The following guide is a tool that we hope makes the process a little less overwhelming.  Let this guide be the first step to beginning the conversation.

Free Resource

Download Our
Family Estate Planning Kit

An image of two Estate planning guides from Addis Hill Financial Advisors

The documents you’ll need for family estate planning

illustration of estate planning documents

Will

A last will and testament is a legal document that tells your executor how you would like your assets dispersed upon your death.  It is your chance to provide detailed information in writing so that your wishes are carried out after death.  A will states how you would like financial assets to pass, who you would like to represent you, and who is to care for children and pets. 

A will provides direction for how bank and other non-retirement accounts, as well as real estate are to be divided up.  However, a will does not direct how IRA accounts and life insurance proceeds are divided.  That is accomplished by beneficiary designation.

Review Beneficiary Designations

Retirement plans, annuities, and life insurance do no not pass to beneficiaries by way of the terms of your will.  Instead, they pass by way of a beneficiary designation form.  Frequent review of your beneficiary designations is critical as your life evolves.  You will want to factor in who gets what via your will and by beneficiary designation.  If you have large IRA’s, these accounts must now be emptied within ten years of your death and your beneficiaries pay the tax at their tax rate which can be as high as 37%.  Life insurance proceeds are tax free.  Annuity gains are taxable to the beneficiary.

Power of Attorney

A general power of attorney directs your agent to make decisions on a wide variety of issues from financial to healthcare.  Your agent has the same authority as you if you become incapacitated.  You should choose someone to represent you who you can trust and who has a good head on their shoulders.  Sometimes the role of the agent is more limited say to a certain period or certain circumstance. 

Medical Directive

A medical directive spells out in detail your preferences for end-of-life heath care.  You decide ahead of time how you want your doctors and loved ones carry out your wishes for treatment and lifesaving actions if you cannot represent yourself.  

Insurance Declarations & Policies

Three of the most important type of coverages with estate planning are life insurance, liability coverage, and long-term care coverage.  Below is a list of the most common insurance policies included in an estate plan:

  • Life insurance can provide much needed funds for survivors and to cover funeral and estate settlement expenses. 
  • Liability policies protect assets in the event someone hurts another by their actions. 
  • Long-term care policies provide funds for medical care expenses if someone needs care in the home or in a nursing home. 
  • Automobile and homeowners policies provide liability coverage if you are at fault for someone hurting themselves because of your negligence or due to an accident. 
  • Umbrella coverage adds on to these limits if you have assets to protect.

Understanding the details of all these coverages can be quite important to those who have to make decisions if you can’t make them yourself or after you are gone.

Tax Documents

Tax returns provide a great deal of insight to one’s financial situation.  You can learn a lot about financial accounts, real estate, business ownership, debt, income sources, accumulated tax losses, capital gains, and a variety of other matters.  An analysis of a tax return is important to properly planning an estate as well as settling one.

Don’t forget, one of the largest expenses for an estate in Pennsylvania is no longer the federal estate tax, it’s the 4.5% inheritance tax when your estate gets passed to your heirs.  The federal estate tax exemption is $12.92 million per individual.

List of Assets/Liabilities

Rather than having your heirs search and discover what you have, lay out for them what you have and owe to others.  You’d be surprised how things get missed and end up on the state registry of unclaimed assets.

Access to important accounts and information needed after you pass away.

illustration of account access and passwords

Your heirs will be faced with many challenges after your death.  Access to information is key so they can handle issues as they come in.

Smart Phone

Make sure that the password to your phone is kept in a secure location.  Access is lost forever if lost or forgotten.  Our phones are not just a communication device anymore.  They run our lives and contain critical information and links to almost everything we use daily – accounts, thermostats, photographs, security cameras, lights, even your washer and dryer.  Don’t lock your heirs out!  But smart phone access is only as good as the access to the apps and information contained on and in it.

Email

Almost everything of any importance comes to us by way of email.  Your heirs will need access to your inbox and email files to piece things together.

Banking and ecommerce

Most bills are paid on-line these days.  On-line banking access is a key for heirs to pay the bills and reconcile accounts after you are gone.  Venmo, paypal, zelle, and other apps and websites are important to keep open and operating.

Services

Landscape care, home repairs, HVAC service contracts, and a variety of other services is important information for your heirs to have so they can keep things running until your estate is settled.

Safe deposit box

Access to a Safe deposit box is usually denied unless one’s name is on the lease.  Therefore, you may not want to keep documents like a medical directive in a secure but accessible place so your agent has immediate access to the documents.  And by all means, share the location and of the key or combination to a fireproof box you store at home. 

Social media

So much of our lives are shared on social media today.  You will want to provide direction to your heirs for how to handle your digital legacy assets.  Should accounts be closed, memorialized, data saved?  There is a lot to think about!  And, we haven’t even opened the picture file on icloud!

Safely Sharing passwords and other account information

The importance of password management is more important than ever.  We encourage all to use a password management system rather than a password book that can become lost or stolen.  Last year we wrote about this topic if you are interested.  Click here to check it out.

People you want contacted after your death, and how to contact them.

More important than accounts and money are the lifetime of personal and professional relationships you have formed.  You will want to notify your heirs.  Decide who and how these people should be notified.  Consider establishing a list of people with contact information so they can be notified upon your passing.  And, how do you want to treat social media communications about your passing? Here is a list of people to help you get started:

  • Family and friends
  • Financial Advisor
  • Accountant
  • Insurance Agent
  • Attorney
  • Bank
  • Employer
  • Funeral home and/or cemetery
  • Organizations
  • Etc.

Social Security

Usually, the funeral director will provide a death certificate to social security which will trigger Medicare as well.  Social Security also provides a whopping $255 death benefit!

Funeral & Burial

One of the nicest things you can do for your heirs is to preplan your funeral and burial.  Decide ahead of time the Funeral Home you wish to use.  Sit down with them to determine if preplanning and even prepaying is beneficial.  Also, determine where you would like your final resting place to be located.  Consider buying a plot to save your heirs the burden of doing that work in a hurry and at perhaps a greater cost.

Summation/closing

While much of the information shared in this guide is quite simple, you might be surprised at how many intelligent people don’t plan ahead for death.  This leaves your family confused and stressed at a time where they are experiencing grief over your loss.  Do some of the heavy lifting for them ahead of time so they can celebrate your life, not tell stories to their family and friends about how you didn’t plan.  Planning for your demise is one of the greatest displays of grace, love, and respect for those you leave behind.

Addis Hill has created an estate directory document that you can fill out and leave in a secure place for your heirs.  Click here to download or print the directory.  Your heirs will be very thankful.  Be sure to let them know that Addis Hill compiles financial information and data in each client’s financial plan.  We are here to help your executor when the time comes.

Free Resource

Download Our
Family Estate Planning Kit

An image of two Estate planning guides from Addis Hill Financial Advisors

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