Ally Bank doesn't offer services to help you create an estate plan, but because we're committed to helping people make informed financial decisions of all kinds, we look for opportunities to provide you with the kind of information that helps you do just that.
In Part 1 of our four-part series on estate planning, we talked about what an estate plan is and why it's important. Here in Part 2, we'll discuss how to figure out the details in your plans and find an approach that works for you.
Details Matter, and More is Probably Better Than Less
When you create an estate plan, your goal should be simple: to make your wishes clear about where your assets go when you pass away.
"You can make it as detailed or as general as you wish," Frank Boucher, owner of Boucher Financial Planning Services in Reston, Virginia, said in a recent Ally Bank interview. "It can be as detailed as someone saying, 'The shotgun that's hanging over the mantel will go to cousin Joe,' or as general as, 'Whatever is left goes to my kids and they divide it up equally,'" he said.
Generally speaking, however, it's usually good to include more information rather than less. "Families often are fractured over dividing up someone's stuff," said Boucher. "So it's best to document those things, so that everyone knows what's going on."
Make a List
As part of the estate-plan process, you will want to draw up a list of your assets, making it as complete as possible.
"People think of investment accounts, but there might also be furniture, jewelry, art, an interest in a business - various things of that nature," Chad O'Brien, a Certified Financial Planner® with Lassus Wherley, a financial management firm in New Providence, New Jersey, recently told Ally Bank. "You should also list liabilities. The things that are owed need to be part of the estate plan, too."
It's also important to include CDs and money-market or other bank accounts on the list, so the professional you're working with can make sure the accounts are properly titled, to ensure a smooth transfer to your heirs. The same goes for individual retirement accounts (IRAs).
"One of the core benefits of an IRA is having the beneficiary designation," O'Brien said. Having that designation properly made can mean the IRA will not have to go through the probate process, which can potentially save time and costs (not limited to IRAs).
"You aren't required to tell someone that they're a beneficiary, but it's probably a good idea to let them know the money is there, where it's being held, and the contact person at the bank, so they're not scraping around to pay funeral expenses."
Professionals Can Help
Your estate plan not only should look at your assets, but also name the guardian who will have responsibility for your children, as well as an executor (or trustee, if you have a trust) who will see that the instructions in your will are carried out.
You can hire a professional to work through the estate-plan process - a financial planner can often help, and an attorney can draw up the actual documents.
To find the right person for your specific needs, "Get recommendations from friends or professionals you work with," said Erin Baehr, president of Baehr Financial in Stroudsburg, Pennsylvania, in a recent interview with Ally Bank. When using a lawyer, she said, "See a family law or estate planning attorney - not a business law attorney, for example."
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