Organize Your Assets to Benefit Your Heirs

Consolidate your bank accounts

I like many people, open bank accounts for the sole purpose of saving for something special. It might be a special vacation, a birthday party, a new car, or whatever. Then after the occasion has passed, I often leave the account open with a little bit of cash, always hoping to add to the account at a later date. While that never seems to happen, oftentimes the bank imposes a service charge because of the small balance, and I eventually lose the money.

At your death, your Personal Representative, known as your executor or administrator (or if female, your executrix or administratrix) is required to obtain written information about each of your bank accounts, including how it was titled, when it was opened, and to find out the value at the date of your death. If you have several accounts with small amounts of money, obtaining this information can be a significant burden for your Personal Representative and a significant expense to your Estate. If your Personal Representative is a professional, your beneficiaries will be paying for his or her time as well as the costs in obtaining all of the account information.

It is very easy to avoid this problem and minimize the expense to the Estate – just sit down and make an inventory of all your small bank accounts. Take all of these piggy bank savings and consolidate them into one account, either new or existing. The same theory works with more substantial accounts. Just make sure the balances do not exceed the current maximums for FDIC (government backed) insurance on bank accounts. This amount changes periodically so you need to review the current regulations.

Check Your Beneficiary Designations

Check each life insurance policy, retirement plan and annuity to make sure each has a specific beneficiary so that the gift is actually received by your intended loved one. If there is no named beneficiary, the money will become part of your Estate, and will go according to your Will or according to the laws of the state in which you reside at death. If you have named a beneficiary who is alive at your death, the assets will go directly to that named beneficiary, and there will be no need to probate those assets. One added benefit for having a named beneficiary on your life insurance policy is that there will be no Pennsylvania inheritance tax on the proceeds of the policy.

Tell your Personal Representative Where you have Assets

Over our lifetimes we accumulate many things. It often happens that when someone dies, his or her Personal Representative does not know the full extent of the decedent’s possessions and has to spend considerable time and expense gathering that information. To alleviate this problem, you should consider preparing a Statement of Guidance.

The basic idea of the Statement of Guidance is to help your loved ones and Personal Representative sort out the details of your life when you can no longer provide the answers. It provides information such as where your assets are located, what debts you owe as well as where you keep the extra keys to your car, your safe deposit box, your insurance policies and other information the Personal Representative may need at the time of your death. You do not need to add more information than is necessary for the Personal Representative to gather the assets or ascertain the debts. For example, while you may want to add the account number, really all that is necessary is that you write that you have an account at Bank XYZ or that you have a credit card with Bank ABC. Armed with that information, the Personal Representative will be able to get the rest of the necessary information directly from the Bank at your death.

Our office provides a Statement of Guidance to our clients as an organizational tool.

Each of us has specific financial and Estate needs so feel free to contact us if we can help you with any of your individual situations related to your Estate planning or the Estate of a loved one.