Estate Planning Inventory

To plan, or not to plan, that is the question. - Hamlet's more practical cousin, Irving

A journey of a thousand miles may begin with a single step, but you aren't going to make it to your destination unless you look at a map, plot your course, and prepare for the trip. The same applies to the estate planning process. To plan, or not to plan, there's really no question.

As discussed in the estate planning overview, the estate planning process primarily deals with managing important decisions that must be implemented when you are unable to do so. Before you can manage anything, however, you must first know what there is to manage. This is where some self-examination and some self-assessment come in very handy.

This self-assessment is not personal voyage of self-discovery. You don't need to call Dr. Phil or Dr. Laura or Dr. Ruth to get help. Just sit down and compile a couple of old-fashioned lists--your "A" list and your "B" list.

Your "A" list is your "assets" list on which you should include your major assets, their location (e.g., checking account number with bank's contact information), their approximate value and how they are owned (e.g., solely, jointly, or in conjunction with a bank which holds a mortgage on your house).

Try to limit your inventory list to major assets like bank accounts, investments (e.g., retirement and personal), real property (e.g., house or parcel of land), insurance policies, and vehicles. If you feel strongly about other specific items (such as your beloved collection of baseball cards or porcelain figurines), add them to the list too. The length of your list will vary depending on your wealth building skills and how much of a packrat you are.

Once you complete the "A" list of your worldly goods, the next step is to determine who will make your "B" list, the "beneficiary" list that identifies the persons to whom you want to give your wealth at your death. For many, this list will usually include a spouse at the top, followed by children or other relatives, and possibly a companion or close personal friends or a favorite charity.

The bulk of estate planning, then, is to ensure that everything on the "A" list transfers smoothly to everyone indicated on the "B" list should you become incapacitated or die. Applying this principle in practice, many of your assets, for example, will transfer automatically to their intended beneficiary if you use some simple probate avoidance techniques or a trust. The same will occur, except with higher costs and more hassles, via the provisions of a will that goes through probate.

Did You Know? Don't keep your possessions inventory a total secret. Although privacy should always be a concern, you don't want to create a situation where your loved ones are stumbling around in the dark trying to figure out what assets you have and where you have them. Make your "A" list, the asset inventory list, serve double-duty. Since you already have taken the time to make a detailed list of your important assets to create your estate plan, make it continue to work for you after you die. Keep the list in a safe place with your will and other important documents (e.g., safe deposit box or file cabinet). To be of any use to anybody, remember that not only does somebody have to know that the list exists, but the list has to be readily accessible by the person administering your estate. That may translate to giving a trusted somebody a spare key to a cabinet or the right to access a safety deposit box in case of your death. Also remember to update your asset inventory list periodically. Your wealth will hopefully increase through the years and you should always consider the disposition of any new assets you may acquire. Although having more wealth to deal with is always preferable, you may have to adjust your list and the estate planning consequences if your assets disappear for any reason.