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3 Important Estate Planning Questions

Make sure your spouse knows your financial adviser and account information before you die.

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Retirement - lonely person
Getty ImagesYour spouse should know where to find all of your estate and personal documents should you die unexpectedly.
By Scott Holsopple

Remember the famous line from Ben Franklin about death and taxes? "In this world nothing can be said to be certain, except death and taxes." Since tax day has come and gone this year, this is the perfect time to deal with the other sure thing.

Estate planning isn't exactly my idea of fun, but it's absolutely necessary. Just like you're planning for retirement, you need to plan for the inevitable. Some of this stuff might require the use of a lawyer or financial planner for a one-time estate planning session, but you could also find one of the many websites where you can purchase some legal documents and/or consult with an attorney at a lower rate.

But then there are a few important questions many of us don't think about. They're the often overlooked issues of estate planning that could make all the difference for your relatives and heirs after you die. When you're putting a plan in place to help protect your loved ones, be sure to ask yourself:

1. How well does my spouse know our financial adviser? If you're the one in charge of dealing with your family's finances, it's possible your spouse hasn't even met your financial adviser. Or, they may have met for five minutes to catch some signatures early on in the client-adviser relationship. Consequently, if you're the first one to die, your spouse would be reliant on someone they barely know during an extremely difficult time. Since your financial adviser is likely involved with everything from your brokerage account investments to life insurance to individual retirement accounts -- and possibly more -- this is someone your spouse should get to know.

If your answer to this question is "Not very well," make an appointment for a financial review and bring your spouse along. Ask your adviser to walk through your complete financial picture so that everyone, including your spouse, can establish a good level of comfort.

2. Does my spouse know where all our accounts are located and how to access them? The surviving spouse will need to access money immediately to cover funeral expenses. There may also be hospital bills, and, of course, all of the normal expenses that come with everyday life. Your spouse won't have time to search high and low trying to figure out where the accounts are located or how they can access money. If you can't answer "yes" to this question, you need to make sure your loved ones know where to find this information so as to avoid unnecessary confusion later.

Walk through all of your financial accounts with your spouse so he or she comfortably understands how to withdraw funds as needed. It's also helpful to leave a few lists in a safe but easily accessible place:
  • A password list for all your online accounts and memberships.
  • A list of all your accounts and memberships – both online and offline – along with any necessary instructions.
  • A list of your estate planning documents and their location.
  • A list of all lawyers, financial planners, accountants and others who helped you create an estate plan, including contact information.
3. Are our wills and beneficiary designations up-to-date? It's possible this question reminded you of some changes you haven't yet had a chance to make. Those adjustments aside, life events such as births, deaths, marriages, divorces and job changes could mean you'll need to update your will and account beneficiaries.

When it comes to passing wealth, don't assume your will is enough. Plenty of assets might not be covered by your will. Check to be sure beneficiary designations are correct on:
  • Retirement plan accounts like 401(k)s and IRAs.
  • Life insurance.
  • Annuities.
  • Taxable Investment accounts: Taxable investment accounts generally allow owners to select a transfer on death, or TOD, designation, which specifies who will receive the assets and generally allows the account to bypass probate court. This is technically separate from a beneficiary because it's treated differently by the Internal Revenue Service.
You might not like thinking about it, but there's no way around it. No one lives forever. Our mortality might be out of our control, but you can take charge of the situation by putting a plan in place to help protect your loved ones. This list of questions may not be all-inclusive, but they're a good start toward making sure your finances isn't just one more thing for your spouse to stress out over in a time of grief.

The author of this article is not an attorney and nothing in herein should be construed as legal advice. Contact a qualified attorney to discuss the laws in your state relating to inheritance, asset transfers, and any other matters discussed in this article.

Scott Holsopple is the president of Smart401k, offering easy-to-use, cost-effective 401(k) advice and solutions for the everyday investor. His advice has been featured on various news outlets, including Fox Business, USA Today and The Wall Street Journal.


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