Hello, my name is Chad Taylor, Managing Partner with MDT Financial Advisors here in Houston, Texas.
Mobility has made us a transitory society. A century ago, it was likely we would spend our whole lives not far from where we started them, surrounded by lifelong friends and family. Today, it is not uncommon to move many times during one’s lifetime, with the last time perhaps finding us in a retirement community far from the traditional support group.
This creates a problem in planning our last days. Without family, we often have to turn to a friend to act as an estate administrator or attorney-in-fact for health and/or financial matters.
You can make the job much easier if you do a few simple things while you are still able to act.
1. Write a letter of instruction. This letter is to be opened and used by your representative after you have passed on. It should detail your wishes for funeral arrangements as well as whom you would like invited. It should spell out what you would like to have done with personal property—clothes, jewelry, keepsakes, small pieces of art, furniture and sporting goods.
2. Make a list of important people in your life, including their contact information. The list might include your professional advisors, closest friends, all heirs, and most importantly, those who are named beneficiaries of annuities, life insurance policies and retirement accounts. (As an aside, I have seen a number of cases where the named beneficiary was a long-lost friend with sketchy or nonexistent contact information, complicating the task of the estate representative!)
3. Show your representative where and how you keep your important records. Your representative will be required to pay your bills when acting as your attorney-in-fact or your estate’s representative, so it is a big help to know where to find necessary records such as your bank statements, investment account information and tax returns.
While we are on the subject of records, your representative should also know where you keep property records such as deeds and note information. And don’t forget vehicle and boat titles—you wouldn’t want your friend to have to make an unnecessary trip to the DMV for that information!
4. If you have previously gifted property or cash and filed a gift tax return, your representative should know this and know where to find a copy of the return.
My late Alaskan uncle once gave me some advice from the frontier: “Never tell another where you catch your fish, where you keep your whiskey, or where you hide your money.” You can make life a little less complicated for your personal representative if you tell him or her where you have a safe-deposit box or where you hide valuables in your home. (If the thought of disclosing that information makes you uncomfortable, store everything in a safe-deposit box or put all of the locations in the sealed letter of instruction to be opened upon your death.)
When the day comes to act, your representative should not be intimidated by the process. Your attorney and accountant should also be there to help and advise. Your representative’s first responsibility will be to secure your property. If he or she knows things like where you keep your house and car keys, when the garbage has to be taken out, how pets are to be fed and cared for, and how to contact the gardener, the task can be made less burdensome.
It all depends on how much planning you do beforehand.
Thank you and have a good day.