How to Pass Financial Information to Heirs Upon Death

By Michelle Hart

The period immediately following the death of a loved one is often emotionally overwhelming for family and friends. In addition to experiencing a sense of loss and grief, your heirs may encounter confusion and stress related to the distribution of your personal property. Establishing a clear paper trail and enabling easy access to financial documents minimizes financial stressors for your survivors and ensures that your property is distributed according to your wishes.

The period immediately following the death of a loved one is often emotionally overwhelming for family and friends. In addition to experiencing a sense of loss and grief, your heirs may encounter confusion and stress related to the distribution of your personal property. Establishing a clear paper trail and enabling easy access to financial documents minimizes financial stressors for your survivors and ensures that your property is distributed according to your wishes.

Designate Beneficiaries or Payees for Financial Accounts

Designation of beneficiaries for each of your checking, savings, retirement and insurance accounts may be the most important step in safeguarding your financial assets in the event of your death. Financial institutions with valid beneficiary designation forms are allowed to bypass any probate proceedings and distribute the balance of your accounts directly to the named beneficiaries upon receiving proof of your death. This prevents your liquid assets from being used to repay any outstanding debts within your estate. Most financial institutions allow an account holder to name a primary beneficiary, as well as one or more secondary beneficiaries, for each account. Another alternative is to designate your accounts as Payable-on-Death (or POD) accounts. With a POD account, you retain all rights and control of your account until your death, at which point the named POD beneficiary gains control of your account. To ensure proper acknowledgment of your beneficiary and POD designations, deliver a signed and notarized copy of the form to your financial institution in person, and ask a branch manager to sign and date the form prior to filing it with your account documents. Keep a copy of each beneficiary designation form with your signature, the notary’s signature and the branch manager’s signature for your own records.

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Keep an Updated Will

If you have more than one heir, a written will is the most widely accepted method of ensuring your tangible assets are distributed properly amongst them after your death. Enumerate the intended recipients of property such as real estate, vehicles, furnishings and jewelry within the will itself. However, it is best to structure your estate in a way that allows bank accounts and retirement funds to be distributed without being included in the probate process. List all bank accounts and insurance policies for which you have formally designated beneficiaries, including routing and account numbers, along with a notation that beneficiary forms are on file with each financial institution, and state that distribution of those assets is to be conducted directly by the named financial institutions and should not take place within probate. Provide a copy of the will, along with copies of each beneficiary designation form on file with the banks, to your executor every time you update the will.

Leave a Paper Trail at Home

Gather copies of all relevant financial documents, including bank statements; beneficiary designation forms; tax returns and gift tax returns; locations of safe deposit boxes and their keys; vehicle inspection and registration documents; mortgage and home ownership documents; safe combinations; website addresses for online account access, passwords; and paper copies of passports and other government-issued photo identification. Keep them in a secure location, and inform your executor and trusted friends or family members where the documents can be located in the event of your death. Keep a password-protected master file of the same documents on your computer. Alternatively, you may choose to keep the documents on file with your family attorney or in a safe deposit box that can only be accessed by an heir in the event of your death.

Keep Friends and Family Members Informed

Choose at least two confidantes with whom you feel comfortable sharing information about your personal assets. Provide each person with a copy of your will; beneficiary designation forms for all bank accounts and insurance policies; a list of the financial documents you have gathered to facilitate the distribution of assets after your death; and the password(s) needed to access relevant information on your computer. Provide copies of the same information to your accountant and family attorney, and any additional heirs named in your will, if you desire.

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Can a Bank Turn Over a Bank Account to a Sole Heir Without Probate?

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