End-of-Life Financial Planning Checklist

Benjamin Franklin once said that nothing was certain in this world except death and taxes. Even though it may be unpleasant, preparing for both of these events is important to your overall financial health. When deciding how you want your finances handled after you’re gone, you can’t afford to put it off. If you haven’t given much thought to end-of-life planning, these steps can help ensure your family is protected.

Work with a financial advisor who can help you prepare for all the aspects of an estate plan.

1. Make a Will

A last will and testament is the most basic document in your estate plan.

When you create your will, you can specify how you want your assets distributed after your death. If you die without a will, this is known as intestate. It’s then left up to the probate court to divide up your property according to state inheritance laws.

You can also use a will to name a guardian for minor children or appoint an executor of your estate. This is critical because if you don’t have a will, the probate court will assume these responsibilities.

The process for making a will varies from state to state. Some states require that a will be provided in writing and witnessed by one or more people. Meanwhile, other states may consider videotaped or oral wills to be valid.

Even if you have a small estate, you should write a will if you’re concerned about your property after death.

2. Consider a Living Trust

When it comes to estate planning, a will can only do so much.

In some cases, it may be necessary to set up a living trust. Unlike a will, a trust takes effect while you’re still alive. You can use it to manage your estate both before and after your death.

You can put several types of assets in a trust.

Real estate
Vehicles
Stocks
Bonds
Antiques
Artwork
Jewelry
Bank accounts

There are several reasons why you may want to set up a trust in addition to writing a will.

Charitable giving. If you plan to leave a portion of your estate to charity, you can establish a charitable remainder trust to manage those assets.
Special needs beneficiaries. A special needs trust allows you to leave certain assets for the care of someone with a mental or physical disability.
Child beneficiaries. You can create a trust for the benefit of your young children, specifying how they can access the money.
Tax savings. Depending on your situation, establishing a trust may yield tax savings for your beneficiaries.
Avoid probate. Any assets you transfer into your trust will avoid probate. This will save you money on probate costs while keeping your estate private.

There are certain ongoing costs associated with establishing and maintaining a trust. Therefore, it’s beneficial to run the numbers with a qualified estate planning attorney to ensure it’s the right fit.

3. Review Your Beneficiaries

Naming a beneficiary for these accounts can ensure that your assets go to the right person when you die.

If you have these accounts, you should take the time to double-check your beneficiaries. Keep in mind that if you have an account with a specified beneficiary, you can’t use a will or trust to leave those assets to someone else.

If you have joint bank accounts with your spouse, ask your bank whether they allow right of survivorship. This means that if one of you dies, the account funds pass directly to the other spouse without probate. In some states, the right of survivorship is automatic. However, in others, you may have to request a specific notation on the account.

Setting up your accounts this way means you or your spouse won’t have to navigate red tape to access your cash later on.

4. Evaluate Your Insurance

Living Trust and Estate Planning documents.

Life insurance is designed to replace lost income if something should happen to you or your spouse.

If you bought life insurance several years ago, review your policy to ensure you have enough coverage. The amount of life insurance you need really depends on your income, your spouse’s income, your assets and your liabilities.

In addition to life insurance, you may also want to consider buying long-term disability insurance and long-term care insurance.

Long-term disability coverage replaces lost income if you or your spouse is unable to work because of a disability.
Long-term care insurance covers the cost of medical care if you or your spouse develops a serious chronic health condition.

While you may not think these types of insurance are necessary right now, having the right policies in place can pay off big later on.

Planning for end-of-life situations is no picnic, but it’s essential to protecting your finances and peace of mind. The more you prepare now, the better off you and your family will be when the inevitable occurs.

5. Consider Other Assets and Arrangements

You may want to consider how you would like to be buried or what you want your funeral to look like. You can use your end-of-life checklist to specify how you would like it handled.

There are a few other things to consider.

Digital assets. Keep all your logins and passwords in one place. Specify in your will what happens to any valuable digital assets you own.
Real estate assets. It’s important to ensure that whatever your state’s laws specify for passing your home on to the next generation is taken care of. This might be your most valuable asset, so you want to take care of it.
DNR. If you do not want to be resuscitated in certain circumstances, fill out DNR paperwork with your doctors.
Living arrangements. Specify your preferred housing arrangement if you get ill.
Pet trust. You may want to consider a pet trust if you’re leaving an animal behind.
Power of attorney. You may need to pick a power of attorney in case you can’t make financial decisions for yourself.

Plan for Funeral and Final Expenses

Specifying what kind of funeral you want is only half the picture. The other half is figuring out how to actually cover those costs. This is the part that tends to blindside families at the worst possible moment.

Here’s the timing problem. Funeral homes want payment right away, but an estate’s money usually isn’t available right away. Probate can take months in many cases, and even accounts with a named beneficiary can take weeks to process.

Relatives often end up fronting the bill themselves, hoping to be reimbursed after the estate finally settles, assuming that reimbursement happens at all.

There are a couple of ways to sidestep this.

Prepaid funeral expenses. You can arrange your funeral and pay for it now to lock in current pricing and remove the guesswork.
Funeral trust. A dedicated funeral trust accomplishes something similar. You set money aside specifically for this purpose, so it is kept apart from everything else in your estate.
Payable-on-death account. A payable-on-death account skips probate entirely and goes straight to whoever you’ve named. This means a family member can access cash for funeral costs almost immediately, rather than having to cover them themselves and wait for reimbursement. It’s a smaller-scale version of the same fix that reviewing your other beneficiary designations already provides.

By sorting your beneficiaries now, it’s one less thing your family has to scramble to figure out later.

Bottom Line

A couple doing end-of-life planning with their advisor.

You should take certain steps to ensure your estate plan is in order so everything goes to plan after your death. This will not only make it easier for your loved ones but also help you better protect your assets. It’s important to ensure you consider all aspects of your estate plan so that nothing slips through the cracks. Otherwise, it could cost your heirs time, money or both.

Tax Planning Tips

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If you don’t know whether you’re better off with the standard deduction versus itemized, you might want to read up on it and do some math. Educating yourself before the tax return deadline could help you save a significant amount of money.
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