Skip to content
314-303-3218
A stack of books on a table, simplifying your finances to make administering your estate easier on your death.

Simplifying – An Important Part of Planning for Peace of Mind.

I’m a fan of the minimalism movement.  The idea of simplifying my life, by removing those things that are unimportant or don’t add joy or utility to my life, speaks to me.  Of course, being a fan of something and applying it are two entirely different things – ideas can be easy to admire, but much more difficult to enact. And for some people, minimalism is not something for which they would even consider striving as they’ve worked so hard to accumulate what they have and much of it has meaning, aside from joy or utility.  I understand and often find myself in both worlds.  Although I like to think of myself as an “almost” minimalist and believe I try to keep my life simple, in reality, that’s not always where my heart is.  For example, when anyone suggests that I consider downsizing my books, I instead begin thinking about the additional books I wish I owned (or the books I donated and now wish I had back).

I can see both perspectives.  But when it comes to planning for a possible mental incapacity (such as Alzheimer’s or dementia) and planning for our eventual death, simplicity and minimalism truly make things easier for our loved ones.

How Simplicity and Minimalism Make Things Easier

A crucial aspect of any estate plan is making sure property goes to the people you want it to at your death.  By property, I mean anything you own, including homes and other real property, cars, bank accounts, brokerage accounts, retirement accounts and your possessions. Another important aspect of estate planning is making sure that if you become incapacitated, your financial power of attorney or successor trustee – your  “financial helpers”  can easily access your assets to take care of you.  Distributing your property to those important to you, and taking care of you during any time of incapacity, is easiest when you have fewer things to distribute and your finances are consolidated in a few places, rather than spread over many.

Accounts and Real Estate

Let me illustrate with a couple of fictional, simplified examples.

Example 1.  Tom.  Tom has approximately $1,500,000 in assets.  He has a home worth about $350,000, $50,000 in savings and checking at a national bank, $50,000 in savings at a credit union, $100,000 in savings and checking at a local bank, $250,000 in an IRA in one brokerage account,  $300,000 in an inherited IRA with a financial advisor at a different institution, $150,000 in a different brokerage account, $250,000 in a 401k with a former employer and another $150,000 in a 401k with a different employer.

Example 2.  Jane.  Jane has approximately $10,000,000 in assets.  She has a home worth about $750,000, $250,000 in checking and savings at a bank, and the remaining $9,000,000 with a financial advisor at one institution.

Even though Jane has significantly more assets than Tom, her estate will be easier to administer and it will also be easier to manage her finances and care for her, should she become incapacitated.  Jane’s financial helpers, the people or entities serving as her Trustee and Financial Power of Attorney, only have to administer 3 assets, her home, her accounts at one bank, and her account with one financial advisor.  Tom’s financial helpers will have to administer 9 different assets, and even though their value is significantly less than the value of Jane’s assets, it will be more time consuming for Tom’s helpers as they will have to sell the real estate and work with all 8 different institutions, instead of just 2 for Jane.

Possessions

The same is true of our things.  If you’ve ever helped someone move from a house they’ve been in for several decades, or have moved yourself after living somewhere for a long time, you know that sorting through decades of accumulated stuff can be time-consuming and difficult.  This becomes even more true when you don’t know the history or potential value of the possession, because it’s not yours.

How to Simplify

Finances

From an estate planning perspective, the more we can consolidate our financial life to as few accounts and institutions as possible, the easier it is to administer our estate and provide for us if we’re incapacitated.  For cash accounts, if you have multiple accounts at multiple banks and financial institutions, it’s important to ask why and whether that still makes sense.  Was that a location and convenience-based decision that no longer matters now because so much can be done on-line?  Were you searching for the least expensive checking account, or the highest yield, or perhaps cash back, that is no longer relevant?  Maybe you had a vacation, holiday gift giving, or emergency account at different banks, that could instead be consolidated into multiple accounts at one institution?

For investment accounts and retirement accounts, can you consolidate them in one place?  Can 401k’s with prior employers be rolled over into one IRA? Can you transfer investments to one brokerage house so that you only have to manage one set of accounts?  If you have a financial advisor, can you consolidate everything with him or her so that they know your entire financial picture, and should something happen to you, they can help your financial helpers wind things up or be sure they have access to assets to provide care for you should you become incapacitated.

Possessions

The same is true of possessions.  Do you have things you no longer use and have no plan to use anytime soon?  It’s so much easier for your loved ones, and you too if you decide to downsize, to begin the process of donating or discarding things now that no longer serve you.  This is also true of valuable and sentimental items.  Do you have heirlooms you want your children or grandchildren to have that you no longer wear or use?  If so, you don’t have to wait until your death to give your possessions to them.  Do you have jewelry, sports equipment or tools, you no longer wear or use now, that your children or grandchildren could wear and use now?  Not only does gifting now clear away space for you, but it also allows your loved ones to enjoy things that you no longer enjoy, giving you the pleasure of both gifting and watching your loved ones enjoy something you, at one time, enjoyed as well.

On a separate note, this is not a blog about the tax or other implications of gifting during your life.  Before giving away anything of value please consult with your estate planning attorney and your accountant.

Minimalism and Simplifying Resources

There are numerous books and articles about minimalism and how to simplify your life.  A few to consider are below.

The Gentle Art of Swedish Death Cleaning, by Margaret Magnusson

Soulful Simplicity, by Courtney Carver

The Minimalist Home, by Joshua Becker

Essentialism: The Disciplined Pursuit of Less, by George McKeown

The Life Changing Magic of Tidying Up, by Marie Kondo

Regardless of whether minimizing or simplifying is right for you now, hopefully some of the ideas here will help you think about how to make things easier for your loved ones if you become incapacitated and after your death.  And maybe, to the extent you decide to apply any of the principles now, maybe they will make your life easier today, as you have fewer accounts and possessions to manage.

Call a dedicated estate planning attorney to  help you and your loved ones plan for peace of mind with an estate plan appropriate for you. Contact our St. Louis office at 314-303-3218 if you’d like assistance with updating or developing a comprehensive estate or elder law plan.

** The choice of a lawyer is an important decision and should not be based solely on advertisements.

Written August 28, 2023 by Stephanie Martinez

 

Back To Top