Being Prepared for the Inevitable is a Gift to Your Family

Mark Twain said that “The fear of death follows from the fear of life. A man who lives fully is prepared to die at any time.”

Those who are most prepared have a good estate plan in place. It is never to early to make such a plan. Death is not a subject most, if any, person wants to discuss. But failure to make a plan is unfair to the family left behind who try to fulfill unsaid wishes and are left to sort out chaos. This is particularly true if the decedent has minor children.

There are two types of assets upon death: probate and non-probate. Probate assets are those titled solely in the decedent’s name and those assets must go through probate. Non-probate assets are those that transfer directly to a named beneficiary such as life insurance, property titled joint with right of survivorship and joint bank accounts.

The probate assets are those that require a will or trust so that the decedent’s wishes are fulfilled. Every state has intestate statutes that dictates who the next of kin is so property can pass in the event a person dies without a will. However, the intestate rules may or may not comport with the testator’s wishes.

The basic estate plan should include a will, financial power of attorney, healthcare power of attorney/living will and possibly a living trust. The will and trust should include appointment of a executor(trix) and guardian for minor children or dependents. Failure to designate a guardian will require a Court’s intervention and for a court to decide on who the guardian is for minor children. A trust must include a trustee and parameters of how the money should be spent and when final distribution will be made to the beneficiaries.

A living trust is a useful tool to avoid probate and to designate when the funds will be disbursed. It is very helpful for a person who has property in several different locations to avoid ancillary probate matters. For the living trust to be effective, all assets must be transferred to the trust so that the trust is the beneficiary (i.e., life insurance, annuities, etc.). A person’s financial condition must be analyzed to determine if any trust, whether revocable or irrevocable is a good fit.

The legal paperwork is a key component to good estate planning but being organized is also important. It is advisable to have all asset paperwork in one safe location and to inform the estate’s executor(trix) of where such paperwork is located. Creating a list of all assets (bank accounts, 401k, IRA, life insurance, etc.) and updating it at least annually will ensure that all assets are located and liquidated. There is no registry for life insurance policies or stocks and if they are not known, can go unclaimed. Being prepared for the inevitable is a gift to your family.

Kelly Schoening is a Partner in the law firm of Dressman Benzinger LaVelle, with offices in Cincinnati, Ohio, Crestview Hills, Kentucky, and Louisville, Kentucky.