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Cleaning up your finances can simplify estate administration

Former president Dwight D. Eisenhower once said, “Plans are nothing; planning is everything.” Financial planning can be a crucial component to alleviating stress on your loved ones upon your passing or incapacity. One of the biggest stressors when administering an estate is finances.

Here are some things that you can do to tidy up your finances for the “just in case” scenarios.

1) Simplify bank accounts

The first way that could ease the stress of administering a person’s finances (and leave them less vulnerable to fraud as they age) is by simplifying financial accounts. Consolidating accounts can help loved ones track them all down.

2) Have an up-to-date estate plan

A key component that can expedite estate administration is by having an up-to-date estate plan. For example, a properly funded trust can help prevent an estate from ending up in probate court to manage a decedent’s finances and debts. In addition, a comprehensive estate plan can include a power of attorney document where a person can designate an attorney-in-fact to manage financial assets upon their death or incapacity.

3) Designate beneficiaries of accounts

A person’s financial accounts such as life insurance and retirement accounts may allow the policyholder to designate beneficiaries. It may be a good idea to keep the beneficiary designation up-to-date. This can be especially important if there has been a significant life event such as birth, death or divorce from the time that the designations were made.

4) Make lists of important contact information

Creating a list of important people to contact such as a financial advisor, attorney and insurance agents can help trustees and beneficiaries when they need assistance in managing the estate. Making family members aware of the location of the list can help ensure that it will be found.

Tidying up your finances one step at a time can help you feel less overwhelmed. In the end, you can help empower your loved ones and give them a running start when it comes time to administer your estate as efficiently as possible.

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