If you have assets to pass on after your death — especially if you are a parent — you need to take care of estate planning now while you are healthy and able. You are not alone if you have a tough time tackling these emotional issues. According to a Caring.com survey last year of adult children, only slightly more than half (56 percent) of American parents have a will or living trust document. More than a quarter of parents (27 percent) have no estate documents in place, and 16 percent of adult children are unsure if their parents do. Of those who do have a will, 58 percent don’t know the contents of the documents.
To tackle the issue and to encourage family conversations, here are some of the documents that you will need for your affairs to be in order.
LEGAL DOCUMENTS A will; a letter of instruction; power of attorney; a health care proxy; and a “DNR” or “do not resuscitate” order (this may need to be completed upon each new admission to a hospital or nursing home). Trusts are not necessary, but many people find revocable (changeable) or irrevocable (not changeable) trusts useful, depending on family and tax situations. For 2015, the first $5.43 million of an estate is exempt from federal estate taxes. If your estate is above the threshold (or twice that for married couples), a revocable trust may be suitable to consider.
ACCOUNTS A list of all bank accounts, along with user names and passwords; a list of automatic pay accounts with name and contact information of each payee; a list of safe-deposit boxes; a list of 401(k), IRA and Roth IRA accounts; pension documents; annuity contracts; brokerage account information; a detailed list of savings bonds (copies of actual bonds); life insurance policies and long-term care insurance policies
OTHER DOCUMENTS Housing, land and cemetery deeds; mortgage accounts; proof of loans made; vehicle titles; partnership and corporate operating agreements; the previous three year’s tax returns; marriage license; divorce papers; military discharge information; and a list of contact information (contacts on accounts, names, current addresses and Social Security numbers of 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).
After completing all of this hard work, you need to inform your executor of where everything is stored.
If you’re the executor of an estate, things get complicated once a loved one dies, because you have to shift between grieving and doing. You will need to get organized to keep track of the estate settlement progression and remember to request plenty of death certificates — some institutions want originals, not copies, and it’s easier to request them from the funeral home, not after the fact from the city or state.
You should keep track of all bills that are attributable to the estate, including funeral and memorial arrangements, death notices and other ancillary expenses. The estate can reimburse individuals for these costs. The next step is to contact the estate attorney. He or she will likely tell you to gather all of the documents above and to ascertain a date of death valuation for all accounts to which the deceased held title. If there is a surviving spouse, you should itemize what is in both the living and deceased spouse’s names.
Additionally, you could contact a CPA. Even if there are no estate taxes due, in most cases it will be necessary to file an estate tax return. It may make sense to hire a pro to help walk you through the process.