Some people believe that their finances are a way of keeping score in this life, that the more you have when your life ends, the more you’ve ‘won.’ Others believe that the most important part of your finances is to leave things behind for your loved ones to remember you when you die fondly. If you want to maximize your estate’s value to ensure your loved ones are well provided for when you pass away, you should plan ahead, creating a world where your financial nest egg becomes a mighty bird for your heirs and their good fortune.
Maximizing Your Estate’s Value: Regardless of your intentions, be sure your estate is planned for, including a will. The will is essential: If you die intestate, without a will, your property will be divided according to the laws of your state, without regard to your actual intentions regarding the residue of your estate. Planning is essential for ensuring your wishes are carried out regarding the transfer of your property to your heirs. A clear Last Will will additionally simplify any problems your estate may encounter in passing through probate.
Plan Ahead for Success
When you engage in estate planning, you’re giving yourself a road map to perform all the activities that will eventually make up the inheritance you’re leaving behind for your family. Estate planning involves multiple phases of plans, not only after but during the end of your life. Advanced medical directives, plans for a nursing home if you will live in one after your eventual incapacity, and all the dangers and debts your estate is likely to encounter when it’s time to disburse the residue of your estate are all involved in estate planning. It would be best if you planned to retire all your debts before you die because any debt that remains on the books is charged against your estate’s value. A notable exception is student debt, which can be discharged due to the borrower’s death.
Maximizing Your Estate’s Value: Focus on paying down large debts, like credit card and mortgage debt. These things can threaten the value of your estate’s greatest assets, like any real estate you wish to leave to your heirs.
Appraise the Value of Your Largest Assets
The largest assets of your estate are your house and your car, and an estate of high value must ensure those assets are properly covered in its value calculation. There may be someone in the will who would truly appreciate having the property, but even if they don’t, a clear-eyed house appraisal will ensure the cash value of that portion of the estate is properly disbursed among your heirs. A house appraisal should be updated routinely to be sure your heirs have the most appropriate, up-to-date appraisal of the property they will inherit. And that appraisal should have one more update on the date of passing, called a ‘date-of-death appraisal.’ Doing this will ensure your heir knows the value of the property they are inheriting, so they can pay all applicable taxes and fees and have a valid estimate of its value in the future. If the estate goes through probate, the appraisal may be delayed, especially if the heir receiving the house intends to sell it.
The easiest way to appraise the value of your house is to have a real estate agent do a walk-through. They will be able to estimate the value, which will be realistic because they have no emotional connection to the property.
Maximizing Your Estate’s Value: Routinely appraise the value of your house, being sure the condition of the house is properly maintained. Plan for the heir who will take custody of your home, and be sure they’re involved in your planning for the disbursement of the residue of your estate, to ensure they are involved in the appraisal as well. Certain renovations to involve the heir taking custody can be made at this time, making it easier to convert the house for their use, whichever way they choose. Get the appraisal done as soon after death as possible. Market conditions change quickly, and you will need the date-of-death number for applicable estate functions like taxes and value to calculate the remaining estate portions.
Don’t Forget About Smaller Assets
Diamonds may be a girl’s best friend, but they are often the most valuable small asset left behind in an estate. While costume jewelry can be dispersed among family members by the simple expedient of sitting around a kitchen table claiming pieces that flatter and amuse the heirs, diamond jewelry is a much more complicated subject. Diamond rings are valuable art pieces that can fetch thousands of dollars at auction. A valid appraisal is necessary to be sure they are correctly valued before being auctioned or sold as part of your estate sale.
Maximizing Your Estate Value: Appraise your diamond rings and other diamond jewelry. Ensure your jewelry appraisal is updated every few years; just like your home, changing market conditions can change the value of your jewelry. Be sure your estate’s valuation is up to date on small assets as well as large ones. Date-of-death appraisal is, however, not as critical for jewelry as it is for homes because the value of jewelry pieces generally does not fluctuate the way the value of a home does.
Factor in Your Personal Debts
Personal debt is a subject few want to tackle, but it is an issue in every estate. If you die indebted (except for certain debts, such as student debt, which is discharged by death), your estate must discharge your debt before the residue can be disbursed to your heirs. Because of this, the management of smart, aggressive retirement of your debts is required if you want to leave a strong estate to your family. The issue of personal debt can be especially sticky for some people, as issues like attention-deficit/hyperactivity disorder can impinge on planning and negatively impact your estate planning. A smart, aggressive financial plan can offset your debt.
Maximizing Your Estate’s Value: Consider consolidating your disparate debts on low-interest personal loans that you can then pay down. The sooner you’re debt-free, the easier your estate planning becomes without the Sword of Damocles of personal debt hanging over your estate’s head. If you need assistance creating a plan for a free and clear estate, engage a financial planner who specializes in handling personal and especially student debt, ensuring you can retire your debt before you retire. Leaving your house and car payments on your record as a retiree can seriously impact your estate’s performance.
Don’t Forget About Shared Debts
Some debts, particularly realty debts and auto loans, can be shared by multiple people. Be sure your estate planning engages those you share debt with, and they understand that in the event of your passing, they will be assuming full legal responsibility for the remainder of the debt, minus the portion owned by your estate. When your estate runs out of funds, your family will not be responsible for the remainder of the debt. It won’t inherit assets from your estate; the remaining debts will simply go unpaid.
Maximizing Your Estate’s Value: We can see by this that the easiest way to negatively impact the value of your estate is to leave debts unpaid at the time of your death. Aggressively retire your debt to leave a valuable inheritance for your heirs.
Reach Out to a Local Attorney
The most important thing you can do when you’re planning to leave behind an estate for your loved ones is to contact an estate planning attorney to see the barriers and difficulties for your estate realistically and strategize how to get around them.
Follow Your Lawyer’s Guidance
Any law firm will tell you the most fundamental way to respect your lawyer’s time is to follow their advice and guidance. A lawyer can, fundamentally, only advise and guide their clients. They cannot force a client to take a particular action or guide their estate in a particular way. That doesn’t mean you shouldn’t listen to your attorney, just that their powers over you are only advisory.
Maximizing Your Estate’s Value: It’s not enough to hire an attorney; you need to listen to their advice for it to work for you. Your estate attorney should be the person who crafts the strategy your estate implements to leave behind the most valuable possible estate, but you are the one who is putting that plan into action.
Put Your Estate Plan Into Action
Once you’ve compiled a financial plan for the end of life and an estate plan, you must follow through on it. Your estate attorney will be there to check in with you as you take steps to implement your estate plan and ensure your heirs are well cared for in your estate through the end of your life and beyond.
Maximizing Your Estate’s Value: Just as for the other management positions of your estate, be sure you have a succession plan for your estate attorneys. If your plan depends on a single person being available, and they die before you do, your estate effectively has no plan.
Plan for the End of Your Life
End-of-life planning takes a lot of energy and is one of the biggest parts of estate planning. Ensuring your funeral drains the least amount of funds from your estate necessary, while being a fitting celebration of your life and accomplishments, is an appropriate plan for your estate. If you pre plan funerals, your estate will benefit from that foresight.
Maximizing Your Estate’s Value: Pre-planning your funeral will let you pay for your funeral before death, allowing your estate to be free of the expenses involved in planning a funeral, which will reduce the final value of your estate. Funeral pre-planning services will allow you to set up a payment plan for your funeral while you’re alive, which will be executed after you die. Be sure to take advantage of this amazing service.
Attempt to Prevent a Lengthy Probate Process
Ensuring all your estate’s affairs are in order before you pass on will also reduce the amount of time your will is in probate. If you have a good probate attorney and your heirs agree on the disbursement of the residue of your estate, you may be able to avoid the probate process entirely. When you name beneficiaries on your property and bank accounts, it will reduce or even eliminate fights in probate court. Your living trust may benefit from more active management on the part of your heirs, who will see it as in their self-interest to avoid fights over your assets.
Focus on Maximizing Your Estate’s Value
Our last major tip for managing your estate value is to involve your heirs in planning for the future value of your estate when you’re gone. They may have useful financial management skills to bring to your estate that they can execute through a living trust, which will also avoid probate and some forms of estate taxes.
Even though estate fights have formed the basis of fiction, especially mystery fiction, it’s often more true that an estate will be disbursed without significant drama. Most heirs do not want to be seen as the person creating a disturbance over the will because this will be a major problem at family gatherings for years to come. A well-managed estate will ensure you are fondly remembered for generations after you’re gone.
