Disclaimer: This topic depends on the country or state you live in. So, I would first talk to an estate lawyer and a tax lawyer. I am neither but as a banker I was often given ‘free’ advice as to how to go around the necessity of a will if you do not have enough assets to give to your beneficiaries. This information is to be used as a starting point for you and not as legal advice. Please seek a professional for all other questions or advice*
Many of us on our FIRE journey seem to forget this important piece of information, that is because death is an uncomfortable topic. However, it does need to be discussed since we are accumulating financial assets and need to have outlined what we would like done with all of our hard-earned money, houses, cars, etc. I have provided a list of 4 things I was advised by various lawyers when I was in my banking position. This was mainly because I asked the company lawyers and they gave me these tidbits that I am now relaying to you so you are aware of what your banker can do for you. You can then seek your lawyers and local bankers for further advice.
These are some of the advice I was given:
- If you’re a parent and own a home, put your child’s name or make sure your spouse’s name is on the deed. This allows the house to move on to the next owner on the deed. The same with any cars that you own can be done. Having a secondary owner on some accounts is helpful in the case of passing on assets.
- Put a family member(s) you trust as a POD (payable-upon-death) beneficiary on your bank accounts. If you do not wish to have a will but want to have something left for your family when you pass this is a good way. Those on the POD list are only allowed access once all the account owners have passed and have their death certificates brought to the bank.
- Have a second owner, someone you trust, on some of your accounts. If anything were to happen to you, if you’re hospitalized or imprisoned then the second owner would be able to have access to the cash if necessary. Although, in some cases this can be done with a power of attorney as well.
- In addition, look into the gift tax, if you are eligible for it. You’d have to talk to a tax agent about your eligibility but from my understanding, if you want to prevent your inheritors from paying an inheritance tax on any money they receive after your death then annually gifting them a certain amount of money might be beneficial for both parties.
The main issue with some of these is finding someone you can trust. Not everyone is fortunate to have family members or friends that can be trusted with not touching assets. Putting a second owner on various accounts mitigates the need for a will if you do not feel you need one. It especially makes it a easier transition for your family if everything is streamlined. As a banker I saw many families going through a difficult time trying to jump through legal hoops to access their loved ones funds. If you do not wish to do any of the above I have mentioned, I would have a will so that your wishes are explicit.