Reader emphasizes the importance of thorough estate planning

Reader comment: I read your recent article on wills and trusts. To add gilding to the lily, as my late father used to say, I wanted to add some thoughts to your column.

We had a trust set up and the preparer gave us a three-ring notebook with the trust docs, will, powers of attorney, etc. I scanned the documents and created a DVD for each of our successor trustees. I also added docs for the trustees with information on bill paying (utilities, property taxes, personal taxes, etc.), waste, recycling, location of fire resistance box containing expensive jewelry (local bank shut down their safety boxes), information on determining the basis of trust assets, listing of all investments (IRA, 401K, bank accounts, stocks), who to notify (pension) of my passing (wife has since passed) and info on steps a trustee must take to administer the estate with warning to verify in case any laws or Internal Revenue Rulings have changed.

I also included my thoughts on how and when to distribute assets to heirs and what my heirs should do with the house.

Ilyce and Sam Respond: You sure have done your homework, and we commend you for it. If everyone followed in your footsteps, it would be a lot easier for their heirs. (Although, we don’t know how many still have a DVD player.)

Essentially, what you’ve done is give your family a blueprint of what you want to happen with your estate. And, you’ve given them the means of getting it done with the least amount of pain.

You mentioned you had a trust, a will, and powers of attorney drawn up. That’s the hardest part, but it’s an important first step. When you walk into a loved one’s home after they have passed, it can feel overwhelming. You might not know where the important things are or where to even start. One of the biggest headaches is figuring out where documents are located, what assets are owned and what debts need to be repaid. Then, you have to get everything organized so it can be distributed.

While what you have done may not lessen the pain of your passing, at least your loved ones will know where to find your important documents and what your wishes are. You’ll need to keep your docs updated as you open or close accounts, buy and sell assets, and hire new attorneys or accountants. All those updates will be as important as the documents you have put together today. If you don’t update them, then information will get stale.

Sometimes, people go to the trouble of making a will or writing a trust, but then don’t tell family members where to find those documents. Or, how to access them. If you keep these documents in a safe deposit box, no one will be able to access them without permission and a key. Once a person dies, the bank may lock up the accounts and lock access to the box unless the person seeking access is on the safe deposit box account or has rights to access the box upon the box owner’s death.

When it comes to your pensions, retirement and financial accounts, you should review them to make sure the information on those accounts is consistent with your wishes. For example, you mentioned that your wife has passed. If she was listed as the beneficiary on those accounts, you’ll want to update them to have the right person named as the replacement beneficiary.

Sometimes people forget that the designation on an account may take priority over a will, trust or other documents. Some financial institutions allow you to name a beneficiary or person to receive the funds from an account upon your death. Here again, make sure that information is up to date and reflects who should get the funds upon your death.

Finally, we’re betting that you created a living trust so that your home would pass automatically to your heirs and avoid probate. But, double check that. Often, people create a living trust and forget to transfer title to their assets from themselves into the trust. If you did transfer the home into the trust, when you die, the trust will still own the home, but the trust document would say who would become the replacement trustee and the replacement beneficiary.

The replacement trustee would have the authority to sell your home after you die. And, the money from the sale would go to the replacement beneficiary. (You would have been the original trustee and the original beneficiary.)

Finally, make sure all of your assets are in the trust, including the title to your car, and any boat, mobile home or other vehicle that may get titled differently than financial instruments and real estate.

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(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, a financial wellness technology company. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)