You are not alone if you have a tough time tackling emotional issues related to your family’s money. According to a Caring.com survey conducted last year, only a little over half (56%) of American parents have a will or living trust document.
Yet a well-planned estate is a wonderful legacy to leave your heirs. Even with modest amounts of money at stake, it’s important for parents to create (and maintain) a set of shared documents, account numbers, and vital contacts. Use the following checklist to help your family tackle the issue — and perhaps start some important conversations.
Estate Planning Documents
Parents should complete the following legal paperwork.
___ Will: A legal document that ensures that your assets are passed to your designated beneficiaries, in accordance with your wishes. In the drafting process, you’ll name an executor, who is the person or institution that oversees the distribution of your assets. If you have minor children, you need to name a guardian for them.
___ Power of attorney: Allows you to appoint someone to act as your agent in a variety of circumstances, like withdrawing money from a bank, responding to a tax inquiry or making a trade.
___ Health care proxy: Allows you to appoint someone to make health care decisions on your behalf if you lose the ability to do so.
___ Trusts (if applicable): Depending on your family needs and tax situations, you may have either revocable (changeable) or irrevocable (not-changeable) trusts. One factor is the size of your estate: For 2016, the first $5.45 million of an estate is exempt from federal estate taxes. If an estate is above the threshold (or twice that for married couples), a revocable trust may be suitable.
___ “DNR” order (if applicable): You may need to complete a “do not resuscitate” order each time you enter a hospital or nursing home.
You should also complete, and share, a list of multiple accounts that heirs might need to access.
___ Bank and brokerage accounts
___ 401(k) accounts
___ IRAs and Roth IRAs
___ All auto-pay accounts, with name and contact information for each payee
___ Safe-deposit boxes
___ Pension documents
___ Annuity contracts
___ Savings bonds (with copies of the actual bonds)
___ Life insurance policies
___ Long Term Care insurance policies
If there are related online usernames and passwords that someone will need to access, print out a list, stash it in a safe or other secure location, and then — this is important — make sure that your executor or heirs know how to find it.
Finally, there are several other pieces of paperwork that, if applicable, can be quite helpful to heirs.
___ Previous three year’s tax returns
___ Housing, land and cemetery deeds
___ Mortgage accounts
___ Proof of loans made
___ Vehicle title
___ Partnership and corporate operating agreements
___ Marriage license and/or divorce papers, if applicable
___ Military discharge information
___ Important contacts: Names and current addresses for all people named in the legal documents, as well as the contact information for the estate attorney and CPA who will be handling the estate.