Follow this checklist to help make wealth transfer planning a more positive experience.
The estate planning process can be overwhelming, and considering what will happen when you or your spouse passes away can be uncomfortable. But getting the process underway now can help you make arrangements for your wishes to be fulfilled while avoiding any unwelcome surprises for your heirs.
“One positive of having a well-thought-out plan is knowing that those important decisions involving wishes for your family and other beneficiaries are already made,” says Bob Robes, business owner advisory strategist at Wells Fargo Wealth & Investment Management.
With that in mind, this checklist of five actions to consider could help make your wealth transfer planning a positive, productive experience, for both you and your spouse.
1. Outline your goals and objectives.
If you are in a marriage or civil partnership, start by having a candid conversation together about your goals for wealth transfer. Consider scenarios addressing when the first spouse passes and what you want for your heirs at the passing of the second spouse. Robes says your immediate goal is to complete certain planning documents (more on that below) to help make sure your assets pass to your spouse and family members in accordance with your goals and wishes and avoid having your estate go through probate, which can be time-consuming.
Of course, it is just as important for single people to outline goals and objectives for their estates.
“If you’ve done your proactive planning,” says Robes, “you will have considered potential scenarios and made those decisions, which should result in your estate being administered more smoothly.”
2. Do a thorough inventory of your assets plus related paperwork.
Keep a current inventory of paperwork needed to administer your estate and where the documents are housed. That inventory should include all assets of financial value – life insurance benefits, retirement accounts/IRAs, family business documents, rental property, homes, automobiles, etc – as well as more personal value.
Over the years, as the family structure evolves, it’s possible to lose sight of some assets. Examples are long-term investments created before the current marriage or even old savings bonds. It’s important to identify those assets now so they can be titled and accounted for as part of your estate.
3. Review asset titling and beneficiary designations.
Your assets should align with your estate planning strategy, so it is important to check all beneficiary designations, titling, and other legal documents for any needed changes.
Make sure that the primary and secondary beneficiaries you have in place still match your plans. Among the applicable assets to check are life insurance, retirement plans, and corporate benefits.
Keep in mind that any assets designated for a trust must be retitled to the name of the trust before provisions of the trust can control them. Otherwise, the original ownership remains in place. It is important to work with your estate attorney and other advisors to decide what assets you will transfer to your trust and to complete this key step.
4. Communicate with family members.
Keeping family members in the loop can be essential for making wealth transfer planning smoother, Robes says. Though strong communication thrives in many families, Robes recommends that those with blended families and second marriages err on the side of over-communicating.
“Informed family members should know what to expect,” Robes says. “Even if they don’t agree with your plans for transfer, there should be no surprises. That can go a long way in avoiding conflict down the line.”
Generally, the rule of thumb is to review your estate plan every three to five years, but you don’t have to wait that long for a review.
5. Review your plan regularly with wealth transfer specialists.
Regular reviews with your wealth, legal, and tax advisors can help you keep track of how well your plan meets your intentions. Your wealth advisors can help you identify your key transfer goals and priorities. An estate planning attorney can help you make sure you have all the necessary estate planning documents in place and properly filled out. And a tax advisor can determine whether your wealth transfer plan helps to minimize any potential tax exposure for your estate.
Generally, the rule of thumb is to review your estate plan every three to five years, but you don’t have to wait that long for a review. “Changes in wealth may necessitate a change in one’s plan,” says Robes. “So if a major life event occurs or if legislation changes, that could be impactful to your estate plan and create an opportunity to engage your advisors in a review.”
Keep in mind that not every life change may be an obvious trigger to revisit your plan. For example, many provisions in estate planning documents are state-specific. So be sure to review your estate plan for needed updates if you are moving to another state, especially from a community property state into a separate property state or vice versa. Staying connected with your wealth, legal, and tax advisors can help you keep your plans in line with your evolving objectives and financial situation.
Wells Fargo Wealth & Investment Management (WIM) is a division within Wells Fargo & Company. WIM provides financial products and services through various bank and brokerage affiliates of Wells Fargo & Company.
Trust services available through banking and trust affiliates of Wells Fargo Advisors. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.
Wells Fargo and Company and its affiliates do not provide tax or legal advice. In limited circumstances, tax advice may be provided by Wells Fargo Bank, N.A. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.
