How To Organize Your Estate And Why It Is Important
Don’t have time to read the entire post now? Watch this video with the summary.
What is the only thing that will happen for sure to everyone who is alive regardless of where they live, how much money they have, or the color of their skin? Death.
You may feel that reading the word ‘death’ is like inviting ‘the thing that should not be named’ to come into your life at any moment. It is scary. Terrifying. A completely normal reaction.
If we add the administrative aspect of death, like who gets the money, the one hundred unmatched Tupperware, jewelry, family heirlooms, etc., the whole event could become significantly devastating. So much so that many people feel so overwhelmed that they want to bury their heads in the sand and hope that everything will magically disappear.
We tend to think that sudden demise happens to other people, not us. This is a usual reaction even if it is misguiding.
Let me paint the picture
Take a moment to imagine that you pass away. Visualize your funeral. Your friends and family are grieving because you are no longer here.
After a few days, reality sets in. There are bills to pay but your income is no longer part of the household.
A close friend takes the lead and starts making the rounds through your banks, work benefits, etc. To their surprise, they find out that there are no designated beneficiaries in any of your accounts. You did not have a will or trust.
This means that all your assets will go to your estate and the court will decide how to distribute it to your heirs, who may or may not contest the court’s decision. And we all know how fast the court system is. In the meantime, your family is struggling while everything settles.
Your kids have been staying with the grandparents, who now must go to court and formally request custody. This would not have been your choice. Your parents are so old fashioned when it comes to raising children in today’s world.
You and your sister always talked about that you would be each other kids’ guardians but never formalized it. Your sister wants to honor your wishes, but she must decide if she will start a custody battle against the grandparents and put the kids through that ordeal.
What can you do?
You can avoid all these pain points by preparing the appropriate documentation. There are different alternatives based on your situation and net worth.
A quick first step is to go to each of your asset accounts (checking, savings, retirement, investment, etc.) and confirm that you have designated the beneficiaries you want for each of them. Most companies including your organization’s benefits will allow you to do this online. For your savings and checking accounts you can set ‘payable on death‘ beneficiaries directly with your bank.
If you have underage kids, make a will where you designate who will be their guardians if both parents are deceased or disabled to the point of not being able to take care of them. Similarly, you can provide instructions for your pets.
If you have assets other than cash or cash equivalent like real estate, collectibles, etc. you could consider having a trust and a will.
Find out if your company offers a benefit for legal matters. If they do, subscribe to it so you do not have to pay full price to have estate-planning documents done.
Consult with a lawyer who specializes in estate planning and is licensed in your jurisdiction.
Let us address some limiting beliefs
Many of us think that talking about death, even thinking about it, is an invitation for death or misfortune to come at any moment. Take a deep breath, or several.
I am not proposing to be thinking about death all the time. I believe we will leave this planet at the appropriate time based on a divine order.
Before that moment comes, let us put our instructions in writing, on a legal document as our last act of love to the people who matter the most to us.
The more clear and organized things are, the less difficult it would be for our friends and family to deal with the administrative aspect of our demise.
We can use this approach, the last act of love to the people who matter the most, to discuss estate planning with our parents.
Many families split after both parents pass away because the inheritance is not clear, so each sibling fights for his or her own interest.
Think about what is most important to your parents and use it to position this conversation and to take action to prepare pertinent documents.
Even if you have discussed your wishes – what kind of funeral you want, who gets your book collection, your awesome shoes or clothes, and if you want to be kept artificially alive – it is important to put them on a valid and undisputable document so events can unfold according to your wishes.
I invite you to explore with curiosity
When I was little, I remember taking a specific antibiotic that had a horrible taste. An orange flavor powder that had to be mixed with water. It tasted so bad I spited it out of my mouth automatically. Somehow, my mom managed to give me that medicine because here I am more than thirty years later alive and healthy as opposed to dead of a simple infection. Do I remember that awful taste? Vividly. Am I glad I took it? You bet!
Think about your own death and/or that of your parents or spouse. You will be incredibly sad, angry, and overwhelmed with the well-intended demonstrations of love through words that by now are clichés, food, hugs, handshakes, and the like.
Few days have passed after the funeral and life goes on – bills must be paid, assets dispositioned, etc. You go to or call the bank; you have the appropriate documentation. You have access to the funds. You can take time off your own job or business even if it is without salary.
You and your siblings are grieving in your own way but there is little to no additional tension between you. Mom and dad were clear even if you do not agree with what you inherited.
Compare that scenario of peace of mind for you and your loved ones with the challenging conversation you will have in the present moment with yourself, spouse or significant other, parents, etc. Even if it turns out to be a bitter one, that you will remember for as long as you are alive, you will be glad you did it.
“Estate planning is an important and everlasting gift you can give your family. And setting up a smooth inheritance isn’t as hard as you might think.” Suze Orman, American financier
If we do nothing, others will decide for us, and our loved ones may not be taken care of in the manner we want.
This is extremely important when you have kids under the age of eighteen so you can decide who will be their guardians if you and the other parent are no longer present or are incapable of taking care of them.
We want to make it easy for others to execute our wishes when we no longer have a voice. This is an act of love.
Let us remove as much stress as possible from our loved ones. They will be grieving losing us so let us alleviate the administrative burden of our death.
Equally important, let us remove the burden of making a decision they may not be ready for, such as ending life. If we leave it in writing, they may not agree with it but at least they will find consolation in honoring our wishes.
As survivors, we want to know our loved ones’ wishes so we can honor them. We also want to keep our extended family together and not have it divided because of material possessions.
We can accomplish all of this and have peace of mind if we are willing to take the bitter tasting medicine of having the conversations today.
What action will you take this week? Please, let us know in the comments.
As a leadership coach, I enable talent to achieve bold goals with high standards. My mission is to help underrepresented women in the financial industry transition from mid to senior level leadership positions by creating awareness, increasing emotional intelligence, and unveiling the tools and choices available to them.