ESTATE PLANNING: INVENTORY OF ASSETS
Creating an accurate and complete inventory of an individual’s assets is the next essential step in the estate planning process. Assets will vary greatly from person to person, but as a rule of thumb anything and everything you own can be considered an asset to your estate. There are obvious inclusions such as checking accounts, savings accounts, and retirement accounts. Any accounts holding money are critical to include in your planned estate. Less considered accounts such as pension plans, investments, and insurance policies also need to be considered in this portion of your estate inventory.
The next obvious category of assets is an individual’s physical property. The biggest portion of your physical assets is likely any owned real estate. Houses, land, and other property assets are particularly important when it comes to estate planning. Those who own properties, but do not have a planned estate, run the risk of those properties going to auction with no guarantee that the properties remain within the family. Less considered, but no less important, are a person’s personal effects. These can be family jewelry, valuable collectibles, or other items of worth. Designating the beneficiaries of these assets can be done in the form of an itemized inventory sheet which can be updated as much as needed at your convenience.
Those owning businesses must do a thorough inventory of the assets and value of their businesses in addition to the above inventories. Business assets can include accounts, real estate, and physical items, which makes accounting for your business crucial to the success of your estate. Even those liquidating a business upon their passing should include these provisions in their planning. Proper planning of estates involving businesses will ensure that it is handed down or distributed with as little cost as possible to your beneficiaries.
A very overlooked, but booming category of assets is an individual’s digital assets. The world is becoming more and more digital, and things you own in digital form can still be considered your assets. Great examples are digital books, such as a Kindle library, or digital collections of music. These can be accounted for and distributed just like any other physical asset if done correctly through your estate.
ESTATE PLANNING: BENEFICIARIES
With goals, expectations, and inventories prepared for the estate, the next step is to determine who will receive the assets. These recipients are your beneficiaries. Generally, beneficiaries begin with the individuals in your life that you wish to pass something onto upon your passing. Easy examples would be your spouse and children, brothers and sisters, or extended family or close friends. You can also name organizations, corporations, and non- profits as beneficiaries of your estate. Many people give regularly to charity, churches, or other societal opportunities and appreciate the ability to continue to do so even after death.
Not all beneficiaries are created equal. It is up to you to determine what portion of your estate you want to go to each beneficiary. Some may receive a specific percentage of the value of the estate, while others may only receive specific items or keepsakes. All of these situations are completely normal and typical for an estate on a case by case basis. The key is to have clear instruction as to who will benefit and how much they will be granted.
It’s worth noting that some beneficiaries may be pre- designated to receive certain portions of your estate. There are a variety of payable on- death bank accounts which require you designate beneficiaries upon creation of these accounts. Common examples would be 401(k)s, life insurance policies, and retirement accounts.
Certain physical properties also commonly have pre- designated beneficiaries. The most common example is jointly owned homes or properties that have deeds with right of survivorship. Upon your passing, the joint holder of the property would be granted the property regardless of what may be designated in your last will and testament. These pre- designated beneficiaries will always take precedence over your will, so it’s important to determine which of these exist in your estate and plan accordingly. In certain scenarios, especially when an estate is of a particularly high value, a trust may be a good option to be the recipient of these assets. A thorough review of each case on a case by case basis is the only way to be sure if a trust is a good fit for your case.
ESTATE PLANNING: NAMING AN EXECUTOR
A person that passes will not be around to make sure that their last will and testament is executed according to plan. This responsibility falls to your executor. The executor, in effect, is the manager of your estate once your will takes effect. The decision of who you appoint as your representative is one of the most important you can make when planning your estate. Common examples of executors are the surviving spouse, a close sibling, or an adult child. In certain cases, it will be impossible to make that decision. Have no fear. In this scenario, the court will appoint an executor on your behalf once your will is probated.
For those who do intend to pre- appoint their executor, it’s important that there are some criteria to who can qualify as an executor through Georgia Law. Under Georgia state law, an executor must be at least 18 years old and of sound mind. State law does put other specific restrictions on who can be named executor, but the criteria is very niche and hard to identify prior to analyzing an estate. As such, it is generally recommended that you seek counsel when planning your estate so that you can be certain that the executor you choose will have no issue putting the will into effect when the time comes.
Aside from executing the will, an executor does have a host of other responsibilities when probating an estate. The executor will be responsible for making sure that assets and property are distributed according to your wishes. They’re also responsible for paying creditors, completing tax records for the estate, and making any necessary transactions required to execute the estate properly. Estates that include real estate, such as a house, may require the executor to take over maintenance of the property until the estate is settled. This would include payment of any bills or unpaid taxes, general maintenance and upkeep, and satisfactions of HOA responsibilities.
Executors are also the individuals who are expected to appear in court if and when necessary during the probation of the estate. This generally makes those who live close to the county that you resided the best fit for executor. They will have the least requirement for travel in the event that a court appearance is expected, while also being local enough to maintain property and events of the estate that are outside of court.
The final consideration of who to name your executor is a personal one. Only you know the ins and outs of the dynamic between you and your beneficiaries. There may be good relationships that you hold with siblings, relatives, or children, that are bad relationships amongst themselves. This is an important consideration both for naming beneficiaries and executor. Identifying and circumventing potential disputes and bickering before the estate ever goes into effect is the best way to mitigate these possibilities.
FINAL THOUGHTS: INVENTORY, BENEFICIARIES, AND EXECUTORS
Take the time to identify exactly what makes up your estate. It’s only possible to efficiently and effectively decide who will receive what once you know exactly what you have. A complete and thorough inventory is critical to the success of your estate.
Once you do know what you have, spend the time necessary to figure out how much to give and where each portion will go. Pre- determining potential squabbles and disagreements will benefit your beneficiaries immensely when the time comes to execute your estate. And never forget that you can change who gets what and how much of it by updating your will regularly.
Naming the executor of your estate is potentially the single most important decision you will make for your estate. Estates can be made through thoughtful, smart appointment of an executor, or broken by a careless decision. They have a great amount of responsibility, so you want to be certain that you choose someone capable of handling the load. If there’s no clear answer, the best option may be to have the court oversee your wishes to be certain they are met.
It’s impossible to apply general information to every estate. The best thing you can do for yourself is to meet with an estate planning professional as you work out all of these details for your estate. We look forward to working with you and planning your estate exactly how you hope it will be.