Organize Your Finances: 3 Steps to Estate Planning

When most of us think about Estate Planning, we think about a big, hairy, monster in the corner that we don’t want to deal with. Yet, like many facets of our financial plan, having an estate plan can reduce a lot of stress and worry in our lives, and allow us to focus on what we enjoy doing the most. Unfortunately, it isn’t until we are confronted with a death in the family that we take action.

Estate planning is actually easier than you think. There are three simple steps:

1. Organize Your Papers
2. Draw Up an Estate Plan
3. Share Your Legacy

Organize your papers is as simple as putting all your important papers in one location and letting people know about it. My wife and I have a filing cabinet where we put all the monthly bills, insurance statements, and other documents. We use the pile file system until the pile gets so big we have to file it. We usually keep 12 months of most statements and shred the rest. You might also keep your financial plan, and estate planning documents here. I suggest letting your key players to your estate plan know where these documents are. So if you have a child that is your executor, let them know the estate plan is in the top left drawer of your desk, or wherever you file it. Give them your financial planner’s, accountant’s, insurance guy’s, and attorney’s name and number. Or at least put this contact information where you file your documents.

A little more advanced way of organizing your papers is to keep a copy of important documents like your estate and financial plan online in a cloud storage. You can share permissions with your kids, executor, powers of attorney, etc., or give them the password to access the documents. But let them know where they are.

Drawing up your estate plan  doesn’t have to be complicated. While I’m not an attorney, I’ve seen a lot of estate plans. Some are as simple as owning everything jointly. My dad called this a farmer’s will. My grandfather grew up in a farming community and almost everyone owned things this way. Now I’m not suggesting farmers, or anyone else for that matter, rely on just owning things jointly, I’m just saying, that’s one way to do it.

A better way is to visit an attorney and have a plan drawn up. As soon as I suggest this, you can tell that most clients are thinking dollar signs, and worry about the costs. Check with your employer. Sometimes they offer complimentary or discounted counsel from an attorney the company has on retainer. If you belong to an association, you can check there too.

If you have a big estate, and are worried about it, I suggest going to NAELA, and searching for an elder law attorney that specializes in estate planning and working with the elderly.

Most estate plans that I’ve seen cost between $1,100 to $1,800. The more complicated they get, the more they can cost. But keep in mind that going to probate can cost you more.

Sharing your legacy is the fun side of estate planning that most people don’t even realize is there. When you’ve accumulated an estate that you feel is valuable, be it in worth, or items of interest, you get to give it away. It’s much more fun to do when you’re alive than when you’re dead, I assume.

As you age, downsize! This let’s you give things away that you feel are important, to people you want to give them to. You also get to see the reaction on their face when they receive them. Just the act of giving creates a feeling of joy for both the giver, and the receiver. Don’t believe me? Give someone, without planning it, something they find valuable and watch their face and reaction.

My wife and I moved into a bigger house a few years ago. In order to do so, we decided to purge some of our stuff. After several trips to Goodwill, we felt such a relief of burden when we moved. Where did we get all this stuff? My realtor said “I know, I know Rich, moving is so therapeutic.” So give it a try. Give away some stuff that you don’t need or want.

Stuff isn’t the only thing you should give away. Experiences and relationships are said to be what we value the most as we near death. If you really want your estate plan to have meaning, share your life lessons and experiences with your friends and family.

A good friend of mine, whose father passed a couple of years ago, asked me if I’d ever asked my dad about his experience in Vietnam. He’d seen pictures on facebook that my dad posted, and it made him think of all the things he wished he’d asked his dad before he passed. He said, “have you ever asked your dad what it was like to be a 19-year-old kid carrying a gun in Vietnam?” So last year at deer camp, I asked him. It was just my brothers and I, and my dad. It was a heartfelt experience to say the least that you can’t get from a will or trust.

If you’d like help getting started, answer these Six Great Questions from Cornell University’s Legacy Project, and share your legacy.