Bob and Sally Jones kissed their two young daughters good night. They reminded the baby-sitter about snacks and bedtime hours. Then they got in Bob's car to drive into the city for a date night. They stopped for a traffic light at an intersection with the busy road that led to the interstate. Bob turned to Sally and said, "It's good to get away with you—even if it's just for an evening. We need to do this more often!" Sally smiled as the light changed, and Bob pulled into the intersection.
The police estimate the drunk driver must have been going at least 65 miles an hour when he ran the red light and smashed head-on into the Jones's car. Bob died instantly. Sally suffered severe injuries as her body catapulted from the vehicle.
Terrible things can happen to terrific people.
You've heard of cases like this: a horrible, unexpected accident or illness that forever changes family life. You hope and pray that your loved ones and you avoid that sort of devastation. But we all know that terrible things can happen to terrific people.
Investec recently sponsored a webinar with a Houston estate attorney to highlight for clients and prospects the importance of proper estate planning. Most of us have a vague, intellectual notion of why we should put the appropriate documents in place, but summoning the motivation to get it done can be difficult.
Put yourself in the story of the Jones family, and contemplate what would happen if you're unexpectedly out of the picture. The exercise raises issues you need to consider and brings to mind actions you should take. To focus your attention, answer the following questions:
1. Will it be challenging to inventory your estate?
Do your heirs know what you own? Will they have to wait for the arrival of account statements or tax documents to confirm your financial accounts? How about that insurance policy you were sold years ago? Is it off your radar screen, forgotten over time? Do you have a safe deposit box in a bank somewhere with that collection of coins you started at 12? By now, that ought to be worth something.
Taking stock of what's yours can be tedious. If instead of being remembered for your disorganization, suppose your principal assets are all identified. Download our "Peace of Mind Checklist." Those you leave behind will appreciate your thoughtfulness in arranging your affairs.
2. Will those who inherit your assets and possessions be the ones you wish to do so?
How will your assets be distributed when you die? More importantly, are you comfortable with those arrangements? Have you reviewed your IRA, insurance, or benefit plan beneficiary forms to see who gets what?
Seriously, do you want a judge to decide the disposition of your stuff and guardianship of your minor children?
How about your will or revocable trust? It's one thing to sit in a lawyer's office and nod your agreement to a chart that discusses where certain abstract assets go. It may be quite another thing to personalize the exercise with your current holdings. And God forbid that you don't even have a will! Seriously, do you want a judge who doesn't know your family to decide the disposition of your stuff and guardianship of your minor children? Creating documents to provide for the distribution of assets and periodically reviewing them ensures what (and, perhaps, who) you leave behind goes to those you intend.
3. Will your survivors know whom to call for help?
Settling an estate won't happen in a vacuum. Your heirs may need help from an attorney, an accountant, and your financial advisor. They may also need to consult with your insurance agent or your company benefits representative. Identify those people now—don't make your spouse or your children piece together your contacts. And don't forget to mention to those nominated to be executor or trustee of their potential role in settling your affairs. You'd likely prefer that it's only your death that's the surprise—not the obligation you've imposed upon them. The "Peace of Mind Checklist" mentioned earlier provides space for noting your essential contacts.
4. Any unfinished business you should handle before your death?
If it's important to you, have you written a "letter of instruction" to your executor or other survivors about your final wishes on funeral arrangements, distribution of personal effects, or other matters? Have you changed your mind about leaving nothing to that prodigal cousin of yours? Is there a final letter you want to write to your children, expressing your love and hopes for them?
Neglecting initiatives you can take before you die may result in regrets, unnecessary work imposed on others, and, quite frankly, memories of you other than those you might have hoped. You need not dread estate planning. Rehearsing your death—thinking through the implications and taking corrective action—can be a thought-provoking exercise and ensure you'll be leaving behind the legacy you want for those you love.
And if you haven't yet thought through your estate planning issues, we'd be happy to sit down with you before you meet your estate attorney. A good discussion of your concerns can clarify your thoughts and keep the momentum going. Give us a call.
Disclaimer: This is only intended to provide a general overview of important estate planning concepts. This document is not intended nor should it be considered as legal advice. Investec Wealth Strategies and its advisors do not provide legal advice. Since estate laws are always subject to interpretations and possible changes in the future, we recommend that you seek the counsel of your attorney concerning your specific situation.