1. A Financial Overview
A financial overview lays out in a straightforward narrative the basics of the client’s finances, and can be helpful for loved ones who may not be numbers-oriented or conversant in financial matters, or for a spouse who is not involved in key household financial decisions. The overview can include broad outlines of the client’s estate plan: where to find the documents and who the key agents are. It can also include information about the household's key financial assets, like real estate and cars.
2. A Master Directory
A client’s master directory goes hand in hand with the financial overview. It includes actual account numbers for the accounts described in the financial overview, as well as the URLs and names of any individuals the client deals with at the institutions where the accounts are held. This is highly sensitive information and should be encrypted or, in the case of a physical document, kept under lock and key.
3. A Plan for Personal Property
Most wills will state that any tangible personal property, such as furniture, should be sold and the proceeds added to the client's estate. For items the client may want to earmark for specific individuals — jewelry, artwork, home items and the like — a memorandum of tangible personal property specifies who will inherit those items. The client should understand that the memorandum is not technically part of the will, and can be updated. Most states consider such memorandums legally binding as long as they are mentioned in the will.
4. A Plan for Pets
Many clients want to include provisions for pets in their estate plans. The gold standard is a pet trust, which includes the pets to be covered, who should care for them and how, and the amount of money to cover their continuing care. Alternatively, the will can specify a caretaker for the pet and leave assets to that person to care for the pet — but the client must understand that the designated person is not legally bound to use the money for the pet’s care. At a minimum, the client should verbally communicate a plan for pet caretaking.
5. A Digital Estate Plan
An increasingly important component of estate planning relates to management and transfer of the client’s digital possessions, including tangible digital devices (computers and smartphones), data stored on devices or in the cloud and online accounts, such as LinkedIn and Facebook. A crucial first step to get a handle on all this is for the client to create an inventory of all digital accounts and store
it in a safe but accessible location. Clients who own valuable digital assets, such as cryptocurrency, should discuss these with an attorney and incorporate them into the formal estate plan.
6. A Plan for the End of Life
Advance directives articulate a person’s attitudes toward life-extending care, but these documents are typically written in boilerplate language, and do not go into great detail on these matters. Clients who want to spell out additional background to loved ones who might be making health care decisions on their behalf should be encouraged to do so verbally, in writing or both. A good place to begin is The Conversation Project, which can help clarify their thinking and help them discuss end-of-life matters with loved ones.
7. An Ethical Will
An ethical will in which the testator hands down his or her belief system to loved ones began in the Jewish community, but has gained traction across cultures over the past decade. In contrast, a conventional will lays out the testator’s wishes about distribution of financial and physical property. A client who is inclined to create an ethical will need not wax profound or write the document in one go, but instead can be encouraged to jot down beliefs as they come to mind, and balance bits of wisdom with deeper life lessons learned. (Photo: Shutterstock)
During the past four months, more than 141,000 Americans have died of COVID-19.
Anecdotal evidence suggests that the pandemic has prompted some people to get serious about creating or updating their estate plans, according to Christine Benz, Morningstar’s director of personal finance.
Benz underscores the importance of ensuring that key estate planning documents are in place — first and foremost, a will, an advance directive (or living will), powers of attorney for health care and financial matters, and guardianships for minor children. Trusts may also make sense in certain situations.
But advisors can also help clients consider other, sometimes overlooked add-ons in the context of their estate plan, especially if their goal is to make life as easy for your loved ones as possible and to ensure that their wishes are carried out after death.
Morningstar, July 22, 2020