Disbursing Your Estate—The Three Phases

We work HARD for the money! I think there is even a song that says that, but it is so true. Whether you earn through working as an employee, or by investing, or by owning and running your own company, this is not an easy process, and we certainly do not want to lose more of that money to taxes, lawsuits, or other claims than is absolutely necessary.

Planning your estate is obviously critical, and eventually it will be passed on to other people, preferably our intended heirs. Setting up these arrangements are what we refer to as Estate Planning. In this and subsequent articles, we will begin with the foundation, and proceed into more intricate details of proper planning. In this article we will discuss the transfer of assets in three phases.

  1. Disbursement of Assets during Your Lifetime—Both personal and business assets need to be properly structured for transfer to your heirs. Certain amounts of money can be given as gifts from your personal assets, and businesses can be structured to involve your heirs in the business as part owners with rights of survivorship. Finding ways to transfer assets during your lifetime can take a considerable amount out of the bite that comes when assets are transferred after you pass away as a part of your estate. And bringing your heirs into your business at the outset can help a great deal if you want them to be involved and to have survivorship rights with the business.

  2. Final Expenses Costs and Disbursements—For many people this is not generally thought of as part of the transfer of your estate, but assets are often put into trusts or covered by wills that will require probating. That process takes time, but final expenses for funerals, family travel, etc. can often be immediate. Prepaid funeral plans or other methods of securing some available funds to deal with these expenses can ease a lot of strain at a time when family members need to deal with mourning and other challenges. Work with financial advisors to set up what is workable and legal in these situations.

  3. Settling your Estate—Spend time and be thoughtful in deciding where you want the various parts of your estate to go. Have conversations with your heirs to let them know what you are planning and make sure that you do not create bitter feuds that can last for generations. Then work with financial advisors to determine the best methods, trusts, etc. to see that your plans are carried out. Many families do not like to discuss estates, but someone has to be above the emotions and be clear-headed, and if it is your estate, you are in the best place to engage those conversations and help others to deal with what the future will inevitably bring.

After you have started the process of setting up your estate transfer, begin creating a file with instructions, bank information, insurance policies, etc. The list of instructions should be kept in a place that is accessible to your primary heirs and executors. The instructions should include funeral arrangements, and any other actions that they should pursue immediately. Commonly this would be at the front of a file drawer that is easy to access. More sensitive information can be stored in a safe-deposit box, a personal safe with other valuables, or with your attorney. The most common question when a person passes away is “What do we do now?” Make sure they know that you have thought and planned things out carefully and that there are instructions for them to follow that will be helpful. And it would also be very nice to include a letter to each of your closest heirs to let them know of your love and caring for them.

This process is something that can bring you and your family and close friends closer together. It is never easy, but it is essential, and we each have the capability of doing it right and reducing the pain we all experience with a close death. We have suggested some first steps, now it is time to enact these all-important plans for the future!

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I https://finance.zacks.com/disbursement-estate-taxed-7843.html from RBC Wealth Management website

ii https://finance.zacks.com/disbursement-estate-taxed-7843.html from Zacks Finance website

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