I apologize for starting with such a heavy title—but I need your attention on this one. When was the last time you wrote a love letter? I encourage you to take a moment to do that, especially if you may be snowed in, looking for something to do. However, this write-up is not about that.
I want to talk about a FINAL love letter. The one that we rarely take the time to compose; the one that we think about in Hollywood classics. The one where the family is called together and someone behind a desk reads out “the last will and testament.” There is a good chance that this scene will never be written into the script when you are gone—unless you facilitate it now!
To aid you in this process, let me provide a non-conventional framework.
Beneficiaries
When we helped you open your IRA, Roth IRA, or similar qualified account, we asked you to provide us with a list of beneficiaries. We would like to review that list with you during your next meeting. If you would like to add anyone, please have their date of birth and, if possible, their Social Security number. At Leading Edge, we use TODs—Transfer on Death—for many non-qualified accounts. This allows these assets to transfer cleanly. Your bank ought to suggest this for any account you have. Banks will refer to these as POD—Payable on Death accounts. Many accounts with beneficiary designations, like life insurance, retirement accounts, or TOD accounts, should pass directly to the named beneficiaries, but what about the other things in life?
Will and Trust
These words are often used together, but they do not have to go together. It is beyond the scope of this publication to help you decide which is best for you. A will is an excellent place to express who will receive your assets upon your passing. A trust can potentially help you avoid unnecessary taxes. A trust can also provide a level of privacy that a will does not. If you need assistance getting this process started, please ask us.
Legacy Letter
This is an excellent snow day activity. I envision two distinct parts to this:
What do you want your legacy to be? A part of my father’s legacy is “leave something better than you found it.” I thought of him when I returned a random cart to the front of the grocery store yesterday. You have the opportunity to share what is important to you with those who are important to you. Perhaps the top 5 lessons you want them to learn from you. Write it down or type it out; send it over to us, and we will add it to your file.
Create a list of items not included in your will. The legal term is “donation mortis causa,” which is only slightly less appealing than “death gifts.” Take care to ensure there is no overlap between this list and the will. You do not want your heirs to spend thousands in attorney fees over a $50 brooch. This is also a great place to include any family history that may be attached to items.
Photos
Take some time to find your fifty favorite photos. Include plenty of yourself, but do not forget the people and places that are significant to you. Pictures are a powerful way to share your experiences-so make sure you are taking them too. You may have to open a frame or two and scan some old classics, but what better time than now to digitize them?
For those of you who are not excited to spend your time thinking about the above items, allow me to provide you with a little more incentive. When you pass, some portion of your estate will end up in probate. Probate simply means settling the estate of a deceased person. That process can occur with your input, as I have laid out above, or it will be done by the state. The state can take up to 18 months and cost as much as 7% of the total estate to figure out what you already know-who and what matters most to you.
Taking some time for these admittedly daunting tasks will be a way of ensuring that your wishes are known and honored. It will also help alleviate some of the stress and burden that will occur at your passing, allowing your loved ones to focus on what matters most. This may be the most important thing you do this year, and it will be more significant than you will ever know.
(Warren) Paul Brockett, CRPC ®
