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When a relative passes away, we often imagine rummaging through countless boxes to determine what to keep, what to donate, and what to toss. Without proper planning, the process of sorting through a deceased family member’s belongings can be a difficult element of the grieving process, as well as a significant time commitment.
In certain circumstances, the failure to properly itemize your assets may even complicate legal claims of ownership among your beneficiaries.
Thankfully, the right estate planning attorney can help you and your family create a comprehensive and easily accessible inventory of your assets. If you are ready to start taking active steps toward building your inventory, consider the following starting points before meeting with your attorney.
Start With the Big Ticket Items
What first comes to mind when you hear the word “inheritance”? For many, residential property, business interests, financial accounts, vehicles, jewelry, furniture, and valuable art are at the top of the list of assets they intend to pass on to their beneficiaries.
When beginning your inventory, consider each category of property and try ordering your assets from highest value to lowest within each category – and remember, you do not need to list everything right now, this list can be changed as needed. Alongside the estimated value of your assets, include the following details:
- Description of the asset
- Co-owner of the asset (if jointly owned)
- Any related debt or liability of the asset – like a mortgage or auto loan
- Location of the asset (address if the asset is a physical property)
- Current beneficiary designation (if any)
Compiling this information before meeting with an estate planning attorney can help guide your estate planning as well as provide a framework for the final inventory.
Remember to also include all life insurance policies within your initial inventory. For further guidance, contact your insurance agent directly, as they may have insight on how your policies can affect the current value of your estate and whether there is any need to equalize distribution among your heirs.
Be Open to Flexibility for Smaller Assets
Do not try to create an exhaustive, itemized inventory of your assets before formal planning with an attorney. Rather, focus on identifying and detailing the larger or more important items and allow yourself to group smaller assets together more generically.
For some of these smaller assets, you may want to leave your beneficiaries with flexibility. However, certain items may hold sentimental value to specific friends or family. These assets, which you know hold sentimental value to your beneficiaries, should be broken out separately and included in your initial draft of your inventory so that you can make your wishes specifically known.
Do Not Forget Your Digital Assets
Increasingly, digital assets such as online banking and payment service accounts, cryptocurrency, and NFTs, are becoming cornerstones of personal estates. Like your physical assets, an inventory of digital assets should include information regarding their estimated value and locations.
Unlike the other assets in your estate, an inventory of digital assets should include usernames, passwords, and secure backup locations. We recommend keeping all necessary information about your digital assets in a safe, physical location and communicating this location only to specific, trusted individuals.
Due to the volatility of certain forms of digital assets, you may want to make a point to review and update your digital inventory on a more regular basis and adjust information as needed.
Name Your Personal Representative and Keep Them Informed
The person(s) you choose to represent your estate after you pass may already be outlined in your Last Will and Testament. If not, remember that your Personal Representative need not be a lawyer. Many people decide on a close friend or family member to handle the responsibilities of managing their assets after they pass.
Ensure that your Personal Representative knows the location of your most recently updated inventory and is well informed on the value of your assets, as well as your exact wishes regarding distribution.
Your Personal Representative should also be made aware of any usernames and passwords required for your digital assets. Be certain that your Will includes language which explicitly grants your Personal Representative the right to access these digital assets, as well as any other necessary permissions.
Treat Your Inventory as an Ongoing Project
As your financial situation evolves, and you welcome new people into your life, remember the need to regularly update your inventory. A new marriage, the birth of a child or grandchild, or an unexpected death in the family are all common reasons to update assets in your inventory, along with your list of beneficiaries.
Regardless of major life changes, consider scheduling semi-annual meetings with your estate planning attorney to ensure that your inventory is always as up to date as possible.
An experienced estate attorney can also help you explore other planning tools such as trusts, which can streamline the asset distribution process and serve as a way for your beneficiaries to avoid probate.
At Sessa & Dorsey, we consider the bigger picture at hand and advise our clients on the best estates and trusts for their specific needs and desires. If you have questions, please contact us at (443) 589-5600.
Related blog posts:
How to Include Cryptocurrencies and NFTs Into Your Estate Plan
Estate Planning 101 for Artists: How to Make an Inventory of Your Artwork
How to Protect Digital Assets in Your Estate Plan
Life Insurance Policies & Estate Planning