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Wealth Planning

Communicating wishes when preparing for a death


No one likes to think about their mortality, or that of a loved one. But as uncomfortable as it may be to think about, preparing and planning for that day, to the extent possible, may make things easier for you, your family and your loved ones at a difficult time. Here are some things you can do today to help your family later:

Talk with your family about your plans

Communication is critical to the success of any plan. Be open and willing to discuss all matters, and alert your family to any documents you have created to guide them. For example, tell your family now what your wishes are using the guidance found in your health care proxy (also known as a health care power of attorney) and living will or advance directive, both of which are described more fully in the next few paragraphs. Also, tell your family in advance what you want done with your assets after you pass away, directing them to your Will or revocable trust and your beneficiary designations. You want to enable your family to make decisions on your behalf by giving them information and guidance about your wishes. This is the best way for you to be comfortable that your wishes will be honored. Making decisions about your health care or administering an estate is far easier when your family and the people you’ve selected as fiduciaries have all the relevant information, including location of documents, bank and investment account and asset information, passwords, and other important items.

Consider signing powers of attorney, and/or creating and funding revocable trusts

These documents make it easier for someone to manage your affairs in the event you are unable to do so yourself.

power of attorney gives someone authority to make financial decisions on your behalf, but only relating to powers defined in the power-of-attorney document itself. Think about whether you want your “attorney-in-fact” to be able to make gifts, for example, and if so, for how much and to whom.

A power of attorney terminates upon the principal’s death, so it does not allow your attorney-in-fact to administer your affairs after you have passed away; generally, the personal representatives of your estate or the successor trustees of your revocable trust take over at that time.

revocable trust gives your trustees (and successor trustees) authority to administer your assets both during your lifetime and after your death—but only assets that are in the trust. Unlike a power of attorney, however, a revocable trust continues even after you pass away, making the administration of your affairs after death much more seamless. Note, however, that there are some powers, such as the ability to file tax documents on your behalf, that only a power of attorney can confer.

Organizing your information

Let your prospective fiduciaries know where you store your important documents, such as trusts and Wills. Your Social Security number will be necessary for communications with the Social Security Administration and other agencies. Some other important information to share with your fiduciaries includes:

 

  • Who is on your family tree?
  • Who are your emergency contacts?
  • Who are your attending physicians? Do you wish to donate your organs? Do you have any specific burial or cremation instructions?
  • Who are your other important professional advisors, such as clergy, attorneys, or accountants?
  • What insurance policies do you have? What retirement plans?
  • Do you have an asset inventory? A liability inventory? Safe deposit boxes?
  • Do you have special instructions regarding any heirlooms or other treasured possessions?
  • What about digital assets—do you have a list of accounts, or user IDs and passwords for various websites or online accounts?

If you’re thinking about making gifts, don’t leave yourself with too little

When estate taxes are a concern, people often consider making lifetime gifts up to their gift-tax exclusion amount ($11.7 million in 2021). While there are rules that might negate some of the benefits of the gift if you pass away too soon after making it (within three years, in most jurisdictions), and there can be negative consequences for Medicaid eligibility (if relevant), gifting is a powerful way to reduce your estate and the complexity of its administration.

Nevertheless, you want to be sure not to give away too much and leave yourself with fewer assets than you need.  People often live longer than expected, whether as a result of increasing life expectancy or because an illness that they thought was terminal may in fact be chronic (even if it is also degenerative).  It is important to talk to your family and your advisors before making any major gifts to ensure you keep enough for yourself in case the unexpected happens.

Make sure your loved ones know your wishes for yourself during your lifetime

Your loved ones often need to step in and help during your lifetime should you be unable to manage your affairs yourself.  If they do not understand the vision you have for yourself and for your wealth, they may be unable to execute as you’d like.  Do they know your health care goals (e.g., whether you will  like to be cared for at home or in a nursing facility, any specific end of life wishes)? Do your loved ones understand what spending you consider discretionary and what you consider necessary (including any gifts to family members and gifts to charity)?  Have you shared any personal values that you’d like to impart to help your loved ones understand your views on life and family?

Expressing your wishes is critical, whether in a family meeting, one-on-one with individual friends and family, in a letter that you can update from time to time, or any combination.  No matter how you choose to communicate what is important to you, make sure to communicate.

Consider speaking to an attorney who specializes in trusts and estates to advise you on wills, trusts and other issues related to your assets. Your J.P. Morgan Advisor can help you create an investment strategy to put that advice into play.


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