So what does it mean to begin your estate planning with the end in mind? There are 2 scenarios to prepare for: your future incapacity and your future death. While those circumstances vary, the key features are similar. You are not able to communicate your wishes to your agent in that moment. It's a sad, stressful time for your family. Someone will be stepping up at that time to do what must be done. If you have the foresight to plan ahead well, you can make that person's job a lot easier.
How do you make your agent's job easier? First, of course, we create estate plan documents that clearly communicate your wishes so your agent doesn't have to guess at what you'd want done. But while that may end my involvement in your estate planning process, it shouldn't end yours.
Executing estate plan documents is a big step, but there is much you can do beyond that to make your future agents' jobs easier. When I give my clients their signed documents I also include a "now what?" letter advising on some additional steps to take. Some relate to document storage, updating beneficiary designations, and sharing the documents with agents, but the ones I want to address in this post relate to the additional information that should be included with the estate plan.
I tell my clients to imagine that someone who doesn't live with them or handle their finances has to come in amid the stress of a death or serious injury to you and begin handling your affairs. Think about what information that person would need in order to do that job. Could that person come into your house right now and easily find the relevant information? If you're like most people, the answer is "probably not." We organize our records in a way that makes sense to us and works for our purposes but as anyone who has tried to merge records with a new spouse can attest, we all have different ways of doing that and what's intuitive to one person looks like a random pile of papers to another (yes, it's fun when a Type-A file cabinet person marries a "piles method of organization" person ;)). And as we increasingly store information online, access to the information is another issue.
So what do I recommend including in the estate plan folder? Here's a sampling:
- Any life insurance policies insuring your life, including plan administrator contact information and beneficiary listing
- A general asset inventory, including financial accounts and any beneficiary designations
- A copy of your free annual credit report, as an easy summary of your creditors (as bills are increasingly sent electronically, your loved ones may not otherwise have timely notice of outstanding debts you may owe)
- Contact information for your financial planner and accountant
- If you own or run a business, details regarding business succession and management
- Your wishes regarding burial/cremation and funeral arrangements (bearing in mind that this folder may not be discovered soon enough to be timely, so you may want to communicate these wishes by other means as well)
- If applicable, login information for accounts you access electronically.
- A personal note to your agents thanking them in advance for their service.
This list is far from exhaustive, and what's needed in any given circumstance may vary. But as you can see, the relatively easy act on your part of gathering this information and updating periodically can make the agent's job much easier and more straightforward when the need arises.
Creating an estate plan is a great service to your loved ones to ensure that when the time comes that you can't be there, their needs will continue to be met. Taking that extra step of including related information is a great service to the agents you are entrusting with honoring your wishes and helps make their job easier and, by extension, ensures that less of your estate is spent on administration and more goes to your loved ones.