The End is a discussion about death. This subject usually gets ignored as we humans avoid talking about it. And yet, it is going to happen. Here is the question I have for you, will you be prepared or will your loved ones have a mess to clean up? Death is difficult enough, adding a financial mess to it can make it overwhelming and more stressful. It's time to get those finances in order. See a to do list here.
Where do you start? Go find yourself a quiet space and think about how you want to divide up your assets upon death. If you are married, bring that spouse along and talk about it together. The key here is to think for yourself. This is your finances! Do not let others tell you how to deal with this issue at death. You decide and that means you have thought through the process from different perspectives.
Next up, get that Will done or updated. Make sure your wishes are clearly defined. Once that is complete, have a discussion with your heirs so they understand how it will work. Casket or cremation? Make sure your executor has a copy of the Will. Make sure your copy goes into that death file that you keep someplace safe in the house. A low cost and efficient Will can be completed here.
Next up, a living Will. What if you are almost dead? The living Will makes your wishes crystal clear. Once it is complete, you have that same conversation with your executor so they have no confusion on your wishes. Without this document, the hospital could keep you alive for years, but at what cost to you and your family? Get a low cost living Will here. This goes in the death file as well.
Next up, I recommend consolidating all or most of your money in one place. I have chosen Vanguard. You might choose Fidelity or Schwab. Getting everything in one place will make it much easier for your heirs. Then, make sure the beneficiaries are updated on your retirement accounts. Then, make sure your transfer on death (TOD) is updated on all non-retirement brokerage accounts.
Next, make sure payable on death (POD) is completed on all of the bank accounts. This will get that money distributed as fast as your beneficiaries and TOD. As for the house, I would let that go into probate or a trust if you like. Should you have a trust? Maybe, is the answer. Learn more about that issue here. A trust is going to cost you a chunk of money. Get one only if needed. Otherwise, stick with probate.
Take all of those documents and information and place them into your death file and then tell your loved ones where that death file is located. This is the place they go to deal with your financial matters when you die. You will make their life so much easier knowing where to go rather than not knowing. Consolidating and simplifying is the last wonderful gift you can provide to your heirs.
Are you done? Not quite. Let's take a moment and think about this thing called death. Do you want to give money away with a cold hand or a warm hand? Do you want to give money away to your heirs at death or while you are living? I can guarantee you it will make you feel so much better when you give it away while you are alive. Put some thought to this matter. Consider reading Die With Zero.
Do you give it all to your family? Most people do, but I would like to make a case for a modification to that approach. For many people (including myself), my family has had a good life with many opportunities (and me chirping in their ear about finance since they were very young). Others have had a much more difficult time of it. What about providing some of that money to others outside the family?
I know this is a tough pill to swallow for some so let me just explain my approach. I will be giving my brokerage and Traditional IRA to The Giving Solution, a non-profit who will pay no tax when they receive it. This organization helps anyone with their finances at $0 cost. They provide interpreters to help overcome language and cultural barriers, helping first generation immigrants when possible.
Basically, that non-profit attempts to help people who need the most help as they struggle to survive at times in this unforgiving world. I prefer to use my money while alive and when I pass to help those folks and their families just like many have helped many of our families as they immigrated into this wonderful country. You can see an illustration here on how I am distributing my money.
You will notice on the illustration that my Roth IRA is going to my family. I have directed one responsible member of the family to manage this "family account" as it gets distributed carefully over time for family events. In the meantime, it stays in there and grows and then gets moved to a brokerage after 10 years with whatever is left and by the way, it is all tax free coming out of an inherited Roth IRA.
There are many non-profits doing great work as well as many churches. Money can be provided to them now and/or later when you pass helping those who need the help the most. I encourage you to find ways to help others with the money you have built up over time. Giving while you are alive provides you the opportunity to see what your money can do for those who need help right now.
Here is another twist to this discussion. When you leave Traditional accounts to your family, they will have to give governments 30% or so in taxes, keeping 70% or so of what was left. If you give (after age 70.5) to church or charity while alive via a QCD, 100% of that money will go to those organizations with the government receiving $0. It provides you more control to where you want your money to go.
Ultimately, it is your call. You will decide what to do with your money over time while living and at death. Here is what I have learned. Helping others while alive is the greatest gift you can provide. You help others and you help yourself in ways that are not easy to explain, but are very real. The day we decide to help others beyond just our family, is the day our life changes forever. Life is about giving!
