Planning beyond the will

This time of year, families gather to celebrate the season, offering an opportunity to air your plans for the inevitable. In the past, I’ve emphasized the importance of meeting with your attorney to create or update your formal estate planning documents: wills, trusts, powers of attorney and the like. It’s important that these papers are synced with your wishes and current law, but this time I’m going to focus on items outside of foundational documents:

• Beneficiary designations When I think about squaring away beneficiary designations, life insurance is the first thing that comes to mind. Beyond that, IRAs, current and former employer retirement plans, and annuities also have beneficiary designations. Generally, your beneficiary designation supersedes any instructions in a will or trust, so it’s critical that your designations reflect your wishes and are synchronized with the rest of your plan. I’ve seen situations where former spouses were still listed as beneficiaries, accounts had no beneficiaries, or accounts had designations that did not match the client’s overall plan to distribute their assets. Ensure your beneficiary designations are good to go.

• Ownership details Closely examine the way your property is titled. For example, property you own as joint tenants with rights of survivorship will pass seamlessly to the surviving owner. On the other hand, if property is titled as tenants in common, that’s not the case. There are also potential income-tax implications. For example, making a child a joint owner of property could result in more capital-gains taxes upon the sale of the property after you’re gone. This is a great topic to discuss with your tax and legal advisers. 

• A personal property plan This should not be an afterthought. Talk to anyone who has seen his or her family ripped apart by arguments over who gets this vase or that piece of jewelry, and you’ll gain insight into the importance of sharing your plan. It could be as simple as giving your trustee or executor the authority to make decisions, designating instructions with respect to specific property in your will or trust, or incorporating, state law allowing, a personal property memorandum into your plan. The guidance you craft today can alleviate big problems when you’re no longer around to referee disputes.

• A continuity book One of military life’s challenges is that just as you’re getting a solid grasp of your responsibilities, it’s time to PCS or switch jobs. Many leaders require a continuity book that helps bridge that knowledge gap so your successor has an idea of which way is up. Do the same thing with your personal affairs. If you don’t have one, create an inventory of your assets, liabilities and insurance policies. This “continuity book” should also include info on your social media accounts, key contacts, funeral wishes and, of course, a list and the location of your key estate-planning documents. This is an important resource for agents, trustees and executors as they step in to perform their duties.

• Liability insurance An estate-planning lawyer once told me about a client who died in a car accident. Unfortunately, the attorney’s client was at fault for the accident, and it resulted in numerous lawsuits that wiped out the estate. Unfortunately, his client had gotten rid of his umbrella policy in anticipation of not being behind the wheel. At the time, the story spurred me to get my own umbrella policy. I hope it encourages you to look at where you stand with liability insurance. 

Enjoy the holidays, and this year, commit to doing the legwork that will ensure your family spends many more happy holidays together. 

J.J. Montanaro is a certified financial planner with USAA, The American Legion’s preferred provider of financial services. Submit questions for him online.