How I'm Getting My Affairs in Order As a New Retiree
Semi-retiring gave me time to organize my estate plan. Here is my simple 3-step checklist
During my long career in journalism, I was good at meeting deadlines, which made me popular with editors. I’ve always filed my tax return well before April 15. I even return my library books on time.
But when it comes to things that don’t have a hard deadline, I’m less diligent. I often postpone mundane tasks, such as cleaning out my spice cabinet, because I don’t have to worry about paying interest or penalties — or losing my job — if I put off tossing some expired cumin.
I suspect that for many people, estate planning falls into this category. It’s something we’re all aware we’re supposed to do, but since we don’t know when we’re going to die, there’s no specific deadline for completing this unpleasant task.
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It’s important to understand that creating an estate plan isn’t just about deciding who will inherit your assets after you’re gone. Without advance directives for your finances and healthcare, your family could be forced to go to court to obtain the authority to manage your affairs if you become incapacitated.
Here's my checklist.
Update beneficiary designations
Now that I’m semi-retired and definitely not getting any younger, I’m in the process of getting my estate in order. My first step is to update my beneficiary designations. My husband and I don’t have children, so I’ve named him as the beneficiary for retirement accounts and other financial assets that aren’t already jointly owned. But I need to add a secondary beneficiary — also known as a contingent beneficiary — to those accounts.
A secondary beneficiary will inherit your assets if the primary beneficiary is deceased, can’t be located or declines the inheritance. If that happens and there is no contingent beneficiary, your assets will go into probate — the legal process by which assets are distributed in accordance with state law.
You can name multiple contingent beneficiaries, so I plan to designate some of the charities I support. (If I outlive my husband, I’ll probably name them as my primary beneficiaries).
Update powers of attorney
My next step is to make sure our powers of attorney for finances and healthcare are up to date. Many people believe married couples don’t need these documents, but if you are incapacitated, there may be limits on what your spouse can do with jointly owned accounts without a POA. The same goes for power of attorney for healthcare (also known as a healthcare proxy), which gives someone you trust the ability to make healthcare decisions on your behalf.
If you don’t have an attorney, you can download the documents from websites such as LegalZoom and Rocket Lawyer. It’s a good idea to have these documents notarized, even if your state doesn’t require it, because financial institutions and hospitals may not recognize forms that a notary doesn’t sign.
You should also make sure that your financial service providers will honor your POA for finances. Some institutions require you to use their own POAs, and obtaining one at the last minute is not something you want to have to deal with in an emergency.
Draw up a will
The final estate-planning task I need to tackle is drawing up a will. Although beneficiary designations will provide for the distribution of my financial accounts, both my husband and I have inherited items with a lot of sentimental value, and we need to think about what will happen to them after we’re gone.
And I’m going to start getting rid of things I’m pretty sure nobody wants — an effort popularized by Margareta Magnusson, author of The Gentle Art of Swedish Death Cleaning. Magnusson, who died earlier this year, said that decluttering is one of the greatest gifts you can leave to your heirs. Hard to argue with that.
Sandra Block is a former senior editor of Kiplinger Personal Finance. Send comments to sandra.block02@futurenet.com.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
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