Preparing Your Estate for a Smooth Inheritance

Nobody knows when their time will come – but most adults have the capability to at least make some basic plans for that time.

As we age, thoughts inevitably turn to estate planning. Some people leave it too late and the resulting confusion, delays and expense can be hard on surviving family members at a time when they should be able to focus on grieving.

If you want to plan a smooth estate inheritance for beneficiaries after your time comes, there are a few steps you can take to prepare – and you don’t need to wait until your final years to take them.

Preparing your estate for inheritance

Most people know that they need some basic estate planning documents in preparation for later in life and after they’re gone.

It’s natural to want to ensure that you are looked after as you age, loved ones are looked after you’re gone, the right assets are left with the right people, and the delays and expense of a long, drawn-out process of transferring these assets are avoided.

It is perhaps surprising, then, how many estates turn into a mess. Many people do not know where to start – and others avoid having to make tough decisions.

Anyone expecting a smooth estate inheritance should take the following steps:

Assemble a list of assets

Make a list of all your assets including bank accounts, property, investments, and brokerage accounts. Also list non-tangible assets like 401(k) plans, IRAs, bank accounts, life insurance policies, and other policies such as health insurance.

Then detail any valuable property you own such as vehicles, collectibles, jewelry, etc. There may be some items that you want to allocate to certain individuals after death.

Make copies of your list.

Keep a list of debts

It will also help estate administration if you keep a list of debts up to date.

This might include credit card debts or other obligations such as car loans, mortgages, home equity lines of credit (HELOCs), and any other debts you might owe.

Add all relevant account details, contact information, and the location of the agreements. Again, make copies of your list.

Draft a will

Ideally, you should draft a will as soon as you enter your adult years and keep it updated as your life circumstances change.

A will dictates how your assets are distributed after you die. If you are a parent, it can also make provisions for dependents after you die. You can name a guardian for minor children and even nominate someone to look after your pets.

A will is the most basic type of estate document – but also one of the most important. Depending on how complex your asset portfolio is, a will may be relatively simple to draft but you should still make sure that it is done with the help of an estate planning attorney.

If you’re married, you and your spouse should make separate wills, outlining the plans for the surviving spouse when one of you dies.

Appoint a trusted person as personal representative

The appointment of your personal representative is an important decision and needs careful consideration.

This person will administer your estate according to the wishes outlined in your will. Select a trusted person with the availability and the skills to perform the considerable duties that an administrator is responsible for.

This may be your spouse but it does not have to be. Your spouse is likely to be emotionally distraught upon your death so may not be the best person to execute your estate.

Ideally, talk it through with the individual first and let other loved ones know who you have appointed and why.

Consider the formation of trusts

Living trusts can help you achieve a smooth estate inheritance because assets contained in trusts often avoid the probate process.

After a person dies, the will must usually pass probate before it is validated and the personal representative can begin distributing assets. This can add weeks or even months to the process depending on backlogs in the courts.

With the careful use of trusts through your estate planning attorney, you may be able to ensure that assets can be transferred directly to loved ones after you pass.

Store estate planning documents safely and review them regularly

Once you have all the necessary documentation drafted, make sure you store it in a place where the right people can find them if needed.

Make sure that access is provided for everyone who needs it and, wherever necessary, makes copies of certain documents for certain individuals.

The earlier in life you create these documents, the more likely it is that you will need to amend them from time to time. For most people, a review every few years makes sense.

Major life changes like marriage, divorce, or the birth of a child may mean that you need to update beneficiary designations, appoint a different personal representative, change a power of attorney, or make other modifications to the documents you have created.

How can you best avoid estate disputes?

The best way to avoid estate disputes is to simplify your assets and debts as best you can, ensure that you have drawn up the correct documents to achieve what you want, and make sure that the necessary people are aware of them and can access them.

Enlist the services of an experienced estate planning attorney to ensure that the documents are all legally enforceable.

Estate disputes are most common when the decedent has not prepared the correct documentation or has not communicated with the right people about this documentation. Pre-planning is everything if you hope to avoid disputes and have a smooth estate inheritance.

DIY wills, for instance, are notorious for being challenged. You need to make sure that you sign and date your will in front of two non-related witnesses who should also sign the document. It should also be notarized. Failure to follow these important steps can easily leave the door open for estate disputes, which can delay the transfer of assets by months or even years.

It is also a good idea to write a letter of instruction in addition to your will. In this, you can instruct family members about your personal wishes for your funeral, what to do with digital assets like social media accounts, and so on.

The most important step in avoiding estate disputes is to have the documents drafted by a competent attorney. You may also want to speak to a financial planner about avoiding excessive estate inheritance tax.

Whoever provides advice on what to do, make sure that the final copy of each document has been drafted and approved by a lawyer.

How can estate lawyers help?

This article has covered how to ensure a smooth inheritance after you pass away. However, estate planning is also about making sure you have plans in place for later in your own life if you lose mental capacity or require special aged care assistance.

Financial and medical powers of attorney, a living will, and a health care proxy are essential estate planning documents that help you plan for such eventualities by appointing trusted individuals to act on your behalf if you become incapacitated.

If you need help with preparing any estate planning documents in New York, please do not hesitate to email or call us at (212) 307-1499.