Your Estate Plan Should Be No Secret
Many people are uncomfortable discussing with their loved ones how they plan to distribute their estates. Perhaps you don’t want your children to realize how much they may receive after your death. Or maybe you think your choice of heirs could change in the future.
However, if you don’t discuss your estate plans, disagreements and conflicts could erupt once the details are revealed. For instance, after your death, siblings may resent each other if distributions aren’t equal — even if one child is substantially less financially secure than the others. Or children may feel anger toward a deceased parent’s spouse from a second marriage if they feel the spouse is spending their inheritance. At that time, you won’t be able to explain your thoughts and wishes regarding the distribution of your assets.
Discussing your estate plans gives you an opportunity to inform heirs about the distribution of your estate and explain why you decided to handle matters in a certain way. You can go into specific detail, informing heirs how each asset will be distributed, or you can give a general overview of your estate plan.
If you’ve selected one heir as executor, explain why you chose that individual. As an alternative, you can leave a personal letter with your estate planning documents explaining these items.
A Personal Letter
Even if you reveal your plans to heirs, you may also want to include a personal letter. In it, include information about benefits, special wishes, who should receive personal effects, your cemetery and funeral preferences and the location of important documents.
At minimum, specify where the following documents are located:
- Income tax returns,
- Life insurance policies,
- Other insurance policies,
- Investment details,
- A list of household contents,
- Outstanding loan documentation,
- Automobile titles,
- Important warranties and receipts,
- Checking account information,
- Credit card details, and
- Information about your home.
This letter will help your heirs identify all assets and benefits and avoid speculation about your wishes. Preparing the letter will also force you to organize your records and make sure all important documents can be easily located. Because the information is likely to change, review the letter at least annually.
Breaking Down the 2020 Employee Benefit Plan Audit for Plan Administrators
Companies with more than 100 participants in a retirement plan have probably undergone an audit of the plan’s financial statements at some point.