6 Tips to Organize Finances Before Starting Estate Planning

Organizing finances before estate planning

Estate planning can feel overwhelming, but it is necessary to ensure your assets are in order and your loved ones are taken care of. Establishing an estate plan can also make certain issues easier for you and your family during your lifetime should the unexpected occur, including a catastrophic injury, a catastrophic illness, or a chronic illness. The following tips can help you create an estate plan efficiently.

1. Designate important roles.

One of the most important things to do when getting ready for estate planning is to establish which people in your life will play which roles. Three important roles to consider are who will become the executor of your will after you die and who will be the agents you name in both your durable financial power of attorney and medical power of attorney.

The executor of your will, for example, distributes your estate’s assets after your death. On the other hand, if you become incapacitated and are unable to make important financial or medical decisions, the agents you name in your powers of attorney (they need not be the same individual) will be able to handle these matters. Both of these roles play a critical part in your financial and medical well-being.

Another important position is that of a trustee. Suppose, for example, that you choose to establish a trust, whether a testamentary, irrevocable, revocable trust or more than one of these; you will need to select the person or people who will act as trustees. Depending on the type of trust you choose to establish, the trustee’s role could begin during your lifetime.

If you are a parent of minor children or have a special needs child who will need care after they reach the age of majority, you will likewise need to pick a guardian for those children. Having a conversation beforehand with the person you plan to name for this position is generally a good idea.

Assuming guardianship for minor children or those with special needs requires a significant commitment from the person you name. Therefore, you want to make sure the person you choose is able and willing to take on the responsibilities that this role entails. Having an alternate person for the guardianship role and others can serve as a safeguard if the person you name cannot fulfill their obligations.    

For any of these roles, make sure that you choose someone you trust and who you feel will be responsible. Establishing these people early on helps you keep the right people in the loop when you are making important decisions, now and in the future.

2. Identify and organize assets and debts.

Identifying, itemizing, and organizing your assets and debts can simplify the estate planning process and simplify matters for your loved ones. Organizing will also help you be more familiar with what you want to designate to whom once you begin the process.

To that end, create a list of your assets, such as your home and other real property, vehicles, checking and savings accounts, retirement plans, life insurance, or other valuable items (such as art, wine, collectibles, cryptocurrency, NFTs, or family heirlooms). When you make this list, include the location of the asset and any relevant information, such as where account numbers are being stored securely, remembering to keep this information in a safe place but where those in need of it can still gain access to it.

Also, create a list of your debts, such as your mortgage, loans, or revolving credit debt. Be sure to note account numbers and any other relevant information as you would for your assets.

3. Organize physical files and documents.

In addition to organizing assets and debts, collect any relevant files or documents, such as proof of identity documents (passport, birth certificate, social security card), property deeds, or insurance policy documents. Additionally, make copies of these documents for your safe-keeping and also so that you have backups in case something happens to the originals.

The best place to store your estate plan is not in a safe deposit box or home safe. Though these locations are smart places to keep important documents like birth certificates, passports, etc., storing an estate plan in a safe can present issues, particularly if the family dealing with the deceased’s matters doesn’t know the combination or can’t find the keys. Instead, it is generally a better idea to store an estate plan in an unlocked or easy-to-access filing cabinet in a fireproof envelope. Estate plans really don’t need to be stored under lock and key. 

After picking your storage location, next, be sure to organize the documents and clearly label them so anyone who looks through the file knows what they are looking at, including you. Yes, you will need to look at your estate plan again.

As long as you are alive, estate planning is never “done.” You will need to continue accessing your estate planning documents whenever you do a legal checkup and possibly update them. Periodically reviewing your estate plan is a good idea. The rule of thumb for doing so is either every three years or whenever there is a life passage, such as death or divorce, that could affect your estate planning decisions.

Once you have collected and organized these documents, make sure they are easily accessible to your loved ones. Finally, let someone you trust know where your documents are. If your representatives cannot locate them, your organizational efforts will have been for nothing.

4. Organize digital files.

Once you have organized your physical files, be sure to organize your digital files. Digital estate planning is an integral part of the estate planning process. Unfortunately, people often forget to make note of their digital financial matters, for example, leaving their loved ones with little to no access. By noting relevant digital financial matters early in the process, you can assist your loved ones’ access and ward against these accounts from being lost or forgotten.

Organizing your digital finances can include making a list of online bank account information, investment account information, and any account information for businesses or shopping. To be thorough, keep your log-in information, such as your username, password, and security question answers, in a safe place. Simply writing down information is generally frowned upon by security analysts. Instead, consider using a secure password system like LastPass and sharing the information securely with whoever needs access.

Additionally, create a list of accounts with access to your banking or credit card information, such as PayPal, and any accounts you have subscriptions with that may be billed to you automatically. Also, indicate the location of digital files, such as bank statements, and ensure that they are clearly labeled and accessible to your loved ones or agents. This step can prevent them from getting locked out of important accounts or missing critical digital documents.

5. Discuss your plans with your loved ones or representatives.

Be sure to engage with your loved ones or representatives you name and notify them that you are beginning the estate planning process. This step can increase clarity concerning your wishes and plans, reduce any complications after the fact, and help to make the process less emotionally draining. In addition, if you approach the process with loved ones in mind or with their assistance, the process can often feel less daunting.

Discussing the estate planning process with others as you go through it can also help you consider assets or other issues that you may have forgotten. Your loved one might be aware of a trust’s existence; for example, you are not or might have some information you have not been privy to thus far, such as being a beneficiary in someone else’s will.

6. Remember that estate planning is an ongoing process.

Though estate planning can feel emotionally taxing, and you may want it to be over with and out of your thoughts as soon as possible, it is crucial to remember that estate planning is an ongoing process. Revisiting your lists and updating them with changes as they occur, including adding new accounts or updating account numbers, is essential.

Keeping your estate plan top of mind can help you have the right mindset to either begin the process anew or revisit your estate planning every three years to make sure that everything is still relevant and in order or at the time of a significant life event. In addition, doing so will help you allow estate planning to do what it, at its core, is intended to do: give you peace of mind during your life and your loved ones that same peace of mind after your death.

Hire a Seattle estate planning lawyer.

Keeping these issues in mind when you begin the estate planning process will help you reduce stress later on and approach the process with efficiency and clarity. Having organized your finances and health care and having consulted with the important people in your life early on will be better for everyone in the months and years following estate planning, making the process more straightforward, easier, and less daunting. At Elise Buie Family Law, our compassionate Seattle estate planning team is ready to address all of your estate planning questions and concerns. Whether you have an existing estate plan you need to update or additions you want to make, or, you want to start the process, we are here to help. Download our free estate planning checklist today.


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