Welcome back to our third edition of 101 Death Hacks. This week, we are focusing on how to communicate your wishes to your loved ones after you pass away.
Death Hacks: Writing it down
- Get a will.
Only 45% of people have a will. That means that more than half of the people in the world have no control over what happens with their stuff when they die. Join the movement; get your will done today!
- Consider a trust
Trusts can be extremely beneficial in a wide variety of situations, and the size of your estate shouldn’t be the limiting factor in whether you utilize a revocable trust for your primary estate planning tool. Ask your estate planner for help deciding if a revocable trust is the right tool based on your unique circumstances.
- Use precise terms precisely
An heir is different from a child is different from a descendant is different from a beneficiary. An executor is different from a trustee is different from a power of attorney. Estate planning is as much a science as it is an art, so you need to use estate planning terms like you would use a scalpel.
- Be clear
Even as a science, there is still an art to the actual drafting of your estate plan. It’s important that you not leave things open to interpretation. Make sure you describe your ideal end result clearly. Identify your kids by full name and even birthdate. Identify your property very clearly. Note: The importance of clarity increases exponentially if you are trying to disinherit someone.
- Include a “contest clause”
Your wishes are your wishes, and if you’re following the recommendations in this list then you’ve thought carefully about the instructions in your will or trust. A contest clause will discourage your family from trying to have your will or trust set aside by disinheriting them if they sue to have your wishes thrown out.
- Include spendthrift language
Spendthrift language prevents your kids from losing their inheritance to outside third parties like creditors, predators, or estranged spouses, and keeps them from spending it before they take possession of it.
- Think about inflation
If you give $20,000 to a child or grandchild for paying college tuition, consider whether $20,000 today will be sufficient to pay college tuition 15 years from now. Adjusting a specific amount to increase at the same rate as inflation might be a better way to handle such a gift.
- Consider using a trust as beneficiary of retirement account benefits
You can create a trust with terms that protect the proceeds from your retirement account from your children’s creditors.
- Let your trust do the work it’s designed to do: designate your RLT as the beneficiary of your life insurance
By funneling all your beneficiary accounts through your revocable living trust, you can more easily make changes to the way your estate is divided. If your wishes change, you only need to change one document rather than having to reallocate multiple policies and assets with several beneficiary form changes.
- Let your estate plan do the work it’s designed to do: avoid joint ownership of assets
The easiest way to defeat your own intent is to list someone else as an owner of your bank account, car, or house. While that might match what you intended, it’s more likely that you wanted that account split among your heirs. Unfortunately, the joint owner will automatically have full rights and access to the account or property and your actual wishes under your will or trust will not apply.
Communicating your wishes
- Be specific
You know what stuff you own. You know where that stuff is located (hopefully). If you have unique wishes for each item or for a particular person, describe each thing or person in enough detail that your plan is clear to someone who doesn’t know anything about you, your stuff, or the people in your life.
- Use plain English, not legalese
Estate planning is full of words like per stirpes, bequeath, devise, testamentary, and executrix. Don’t complicate the interpretation of your will or trust even more by using difficult words like henceforth (from now on), hitherto (until now), and hereinafter (later on in this document).
- Explain your reasons right in your will or trust
Everyone you list as a beneficiary of your will or trust will receive a copy of it, plus your family will need to file your will with the court, making it public record. By explaining your wishes in the will or trust, you all but guarantee that everyone who needs to understand them will have the chance to read the explanation.
- Get a summary of your will or trust from your estate planner and use it to explain the basics of your plan to the people who need to know
Even if you cut out the legalese, your will or trust will have a fair amount of technical language in it. Ask your lawyer for a layman’s summary of the entire thing and use that to explain (or remind yourself!) how your estate will be handled after your death.
- Give copies of your will and codicils to your executor(s)
Giving your executor a copy of your will can help streamline the initial steps in the probate process.
- Give copies of your trust and amendments to your backup trustee
Ditto for your trust.
- Notify any charities you include in your will or trust that they will receive a gift from your estate
Telling charities that they are in your will/trust ahead of time can help you experience the joy that comes from giving selflessly more concretely and gives them the opportunity to include you in planning for how that gift will be used. Plus, they’ll be ready to communicate with your executor when the time comes.
- Don’t let your family be surprised by what’s in your will. Tell them ahead of time.
Communication is critical, especially when your estate planning reflects your wishes and not just what everyone else does. Talking about the end result with your family eliminates shock from any surprises in your will and gives them the chance to talk with you about your motives.
- Don’t tell your family all the details of what’s in your will
Yes, I know I just said the exact opposite thing in number 58. Not everyone’s family can handle a conversation about the death of the patriarch or matriarch. If your kids don’t get along, it might make matters worse to know you treated them differently. For needy beneficiaries, knowing what they’ll get from your estate could cause them to come begging for the inheritance early.
- Show compassion and empathy
Your family is not going to approach your death with clinical detachment, so neither should you. When they read your will or trust, possibly for the first time, remember that they have just experienced a loss of someone close to them. They’re probably struggling with the loss in some way, so your will may open that wound wider if you’re not careful.