For those of you who find this post randomly and don’t know why I am immersed in all things estate planning, my dad and step-mom were recently murdered by my step brother.   In my case, there are many layers of complications that most of you will never face but the need for a well planned estate in the event of your death is SO critical for everyone! Here are a few things that I have learned in the last few weeks about estate planning and protecting your family in the event of your death.

Take one step at a time.  Don’t get overwhelmed and do nothing.  Just take one step at a time!!

• Everyone needs a VALID will. No excuses. My dad and step-mom left a will that was not valid because it was missing one witness signature.  My son was the sole heir and my son will not inherit nearly 250K that they intended for him to have.  It is a big deal.  Get a will!
• Never assume that your computer will be accessible upon your death!  Don’t keep all of your most important documents (only) on your computer.  In my case, my dad’s laptop was stolen and I will never know if there is a valid will just sitting in the documents.  If you use an online back up like carbonite- make sure at least 2 people know about this info so that it can be recovered if you die and your computer is taken or destroyed.
• If you have a valid will, you determine who manages your estate because you name the executor.  If you die without a valid will, the laws of heirship will determine who manages your estate.  Spouse, children, siblings is the order in Texas and Washington. My step mom hadn’t spoken with her siblings in 10 years and they clearly had disdain for her and they are now managing her estate.
• Where money and children are concerned, DO NOT TRUST that people will do the right thing when you die! The only way to make sure that your wishes are executed upon your death is to have a VALID WILL!
• If you have a dependent child- it should be federal LAW that you have a will.  At a minimum, you need to name your child’s guardian. Even if you don’t feel like you have any assets, you have everything if you have a child.
• If you die without a will, a judge will determine who takes care of your child. Don’t let this happen.  Don’t worry about whose feelings you hurt.  Pick a valid guardian.
• If you have been divorced and/or either you or your spouse has children from a previous relationship, it is even more important that you have a valid will so that not only your spouse but your children (and your spouse’s children) are protected. If you die without a will, everything will go to your spouse.  Even if you 100% trust your spouse to make sure your children are protected- if your spouse dies without a will, EVERYTHING will go to your spouse’s heirs.  A step-child is not an heir unless a will dictates that they are.
• If you are not married and want to protect your partner you especially need to have a will.  If you aren’t married- you have ZERO rights to heirship of any assets. If you aren’t married and you have children- you almost more than anyone need to have a will!  If you die and don’t have a will and are not married, your child(ren) will be your heir(s). If you are not married and you don’t have a will and your beneficiaries are not set up properly (keep reading for more info), then it is likely that the trustee of the children(s) assets will not be your partner/the child’s other parent.  Again, never trust anyone to do the right thing where money and children are concerned so make sure you have a will- especially if you are living in sin and have children 🙂  Glad I live in a state where EVERYONE can get married- just a side note.
• Once you have a valid will- you need to make sure at least 2 people have a copy. It is my opinion that anyone who will benefit from your will and/or is the guardian of your children- they should have a copy. Don’t assume the attorney you used to draft your will will retain a copy.  In addition, how are your heirs suppose to know what attorney you used to draft your will.  There is no state or national database that keeps tracks of wills, safety deposit boxes, life insurance policies etc.  It is up to YOU to make sure your family knows about your “stuff.”
• Any assets you have (checking, savings, 401K, CD’s, life insurance, annuities, employee benefits, education savings like 529s etc, etc) need to be collected and put in one easy to find place and don’t forget to update these items as they change.  I am of the opinion that you should make copies of all these asset accounts and make sure at least 2 people have copies of these items along with your will.  At a minimum, list the asset location and account numbers.  Your debtors will find you but unless your heirs know about your assets- your family may not be protected how you intend.
• Get rid of old paperwork and account information that is no longer valid. The last thing you want your grieving heirs to do is spend countless hours sifting through stuff that doesn’t matter just to find the one thing that does matter- trust me on this!
• With the age of online banking (online everything), I suggest that your spouse and at least 1 other person have all of your account login/password information.  It will make it much easier to close accounts, etc upon your death. Not to mention that it could give your family immediate access to funds they need!
• Accounts that list a beneficiary (401K, life insurance, checking, savings, IRA’s) are NOT dictated by a will- they are paid directly to the beneficiary you list on the account.  If there is not a valid beneficiary, the contract of the particular asset account determines how the benefit is paid.  If there is not a valid beneficiary, the payee might be the estate in which case the will (or lack of will) will determine the payee.  In some cases however, the payee could be spouse, children, parents, step-children, etc BEFORE the estate- so the will might not ever determine the benefit. In addition to having a valid will, you MUST update your asset accounts with beneficiaries that reflect your current needs/wishes.
• If you name anyone other than your spouse (a trust, children, other friends/family members) the beneficiary of life insurance and asset accounts (other than retirement), those funds can never be required to pay estate debt.  If your spouse is the beneficiary, he/she might be responsible for any outstanding debt (like medical bills) you have upon your death.  We have our life insurance being paid to a trust to prevent it being eaten up by medical (or other) bills.
• There is a benefit to listing your spouse as the beneficiary on retirement accounts because your spouse can “rollover” those funds to their retirement accounts and defer the tax consequence.  It is my understanding that a spouse is the only person who can avoid taxes on retirement accounts upon your death.  In addition, retirement accounts also cannot be “forced” to pay estate debts (including medical) so we have decided to list spouse as the primary beneficiary on retirement accounts.
• Listing a secondary or contingent beneficiary on all of your accounts is JUST AS IMPORTANT as making sure your primary beneficiary is up to date.  It doesn’t happen very often, but sometimes spouses die together.  In order to make sure your asset accounts are never subject to estate debt, you MUST list a secondary or contingent beneficiary on every account.  For example, if you only list a primary on your life insurance and that person dies before you (or in my parents case- the same time), the life insurance payee might be your estate.  Once the payee is the estate, those funds might be subject to any debt you have prior to your death (which could be substantial if you had a prolonged illness).  The only way to ensure the funds that you intend to protect your family upon your death is to make sure that the primary and contingent beneficiaries are up to date and are not your estate!!
• There are two types of trusts, one is a living trust and one is a testamentary trust that is established upon your death.  In states like Washington where probate is fairly easy and inexpensive, there is not a huge reason to have a living trust- unless your estate is valued at over $5 million dollars and/or your family owns lots of property free and clear that you would like to keep in the family for years to come.  The type of trust we have is the one established upon death.  In our case, our guardian for Sennet is also the trustee of the trust established for Sennet- which just means the guardian also controls the money.  We selected our guardian because we trust them (I know I said don’t trust anyone but I guess I really mean only trust the people you CHOOSE to trust with your children and assets and don’t trust the law to determine who that is!) and we know they love Sennet.  However, if you prefer, you can have a different person control the trust if you want to make sure there are checks and balances.
• The benefits of the trust range from keeping assets protected from estate debt, establishing funds for your children’s education, to making sure that if your spouse remarries after your death- those funds never become community property and are always earmarked for your child- not the children of a future relationship.  You can stipulate a trust to be paid over time or when your child is certain age or when your child has accomplished certain things (like college).  While I think any will is better than no will, these types of issues are the reason I think using a good attorney is worth the upfront cost.
• The type of assets that are determined by a will (or lack of will) are assets like real estate, personal items like jewelry/furniture, cars, some stocks, community property and any asset account that is paid to the estate because there is not a valid beneficiary and the payee is the estate.  If you have items that you know are extremely sentimental to you or your family, make sure you list those items out individually stating who you would like them to go to.
• Get your photos off your computer and get them printed.  Everything was just stuff when we cleared out my dad’s house- except for the photos!  You know that old saying that if your house was on fire all you would take is your family albums- that is SO true.  My other suggestion is to make sure at least 2 people know the login/password of the online storage you use for your family images- especially if you are the one in your family always has the camera- like me!!
• The truth is that most of us won’t die when our spouse does, most of us will be at our children’s wedding and we will meet our grandchildren- but that is not guaranteed and I am BEGGING all of you to make sure you are prepared if you die tomorrow.  I encourage you all to think about what would happen to your family if you died tomorrow.  Think about what would happen to your family if both you and your spouse died tomorrow.  Talk to a financial planner about how much life insurance you need.  Talk to an attorney about establishing a trust.  I am neither of those and these tips are just my personal experience.  I hope you will learn something from my family tragedy that is compounded by an invalid will.
• Some of you have asked, my step-brother can never profit from killing my dad and his mom.  He will not inherit my step-mom’s estate- her siblings will.  This is of course NOT what she intended but because her will was invalid- there is nothing I can do about it.