What happens if you die? Not to be morbid or a downer (although, really that’s what lawyers are trained to be), but do you have a plan for what happens if you die?

I know this is something a lot of people don’t want to think about. It’s hard. Imagining your kids being raised by someone else, imagining your loved ones living life without you. But odds are if you’re getting to be middle aged, you’ve probably dealt with this already in some small way. You’ve probably had parents or grandparents that have died, or neighbors or someone you know on a more superficial level. And you’ve probably seen that it can go relatively smoothly, with everything planned ahead of time and clear instructions and directives laid out in a “death box” or binder that’s easy to find. And you’ve maybe seen people lose their houses and family heirlooms and even stop speaking to close family members because of fights relating to money and inheritance after someone died. Death is painful. Trying to make big decisions when you’re grieving is also really hard and traumatic. That grief comes out in a lot of different ways – oftentimes it comes out in family arguments and strained relationships. Answer the questions ahead of time, plan what you want and prepare for the inevitable. It will make the people you leave behind so much less sad and overwhelmed if you make it easy on them when the time comes.

Things to think about:

What happens to your money? This is really the biggest thing for a lot of people. Because if you’re in charge of paying all the bills and keeping the mortgage current and then you’re gone and there’s no way to access your accounts, all the ripple effects get really big really fast. There are a few ways to plan for this.

1. Many bank and investment accounts have what are called “Transfer on Death” provisions. You can sign your bank accounts over to another person upon your death. They take your death certificate to the bank, the bank transfers the account into their name. Boom. You have to set that up prior to your death (obviously) though so figure out your plan ahead of time.
2. You can create a trust-based estate plan. More on this later, but basically when you create a trust (think of it like a bank account that holds all your stuff/money/land) you put all your assets into the trust – this is called funding the trust. As part of the trust you dictate who you want to inherit and/or control the trust and how you may want to distribute it. So, just like the bank account in the first part, the trust automatically transfers how and to whom you want.

What happens to your loved ones? This is the next biggest issue. It is HARD to imagine someone else parenting your children. But what happens to them if their parents die in a car crash? There isn’t necessarily an established next of kin right? Since there are two families involved. This can become a big fight. And again, there’s grief involved. Big decisions are far more difficult and far less rational when grief is involved. But if you lay out your plans ahead of time, everyone knows what your wishes were and they are more likely to honor those wishes. A will or a trust can clearly outline what you, as the parents, want to happen to your children in the event you die. If you have kids, it is super important to have those documents squared away so your kids don’t have to suffer any more than they already may.

What happens to your house? This maybe isn’t quite as immediate a problem as the others, but it’s definitely an issue. If your home is part of your trust already, then it doesn’t change, just who is in charge of the trust changes. If you’re on a lease, whoever is taking charge may have to try to renegotiate with your landlord. If the property is in your name and not part of a trust, your next of kin may have to take over mortgage payments – hopefully they also have access to your bank account to do this.

Life Insurance can help a lot in these circumstances. If you have life insurance large enough to pay off your mortgage, your next of kin will be ok at least in the short term while they figure out what the next moves are.

Having an estate plan is super crucial. Estate plan just means a plan for what happens to your people and your stuff when you die. A will-based estate plan is lower cost in when you make it – it’s relatively simple and only a few pages. You can combine that with instructions on what you want to happen if you become incapacitated (e.g. you get dementia or go into a coma. You’re alive, but you’re not able to make decisions.) or are otherwise unavailable. Supplemental documents may include things like power of attorney documents or healthcare/advanced directives etc. These are all documents that you sign that give other people certain powers over your life and decision-making. A will-based estate plan WILL have to go to probate court when you die – with a few exceptions relating to low or no assets. That means assets will have to be kept and paid for until the probate process is finished. So if you only have a will and you have a fair amount of stuff, your family will probably have to wait for awhile and hire a lawyer to help sort it all out after you die.

A trust-based estate plan is somewhat of the opposite. It’s front-loaded on the lawyering and the expense. It’s thorough and in-depth and requires some work on your part to get all of your assets re-titled and deeded into the trust account/fund. You can make the trust the beneficiary of retirement funds and life insurance as well to streamline the whole process. But then when you die, there is very little more work to do. The instructions are clear, the rules of what happens to people and things are already laid out and the only work that’s left is actually distributing the things the way the trust instructed. The benefit of a trust is that YOU are the one making the decisions and hiring the lawyer and working with your own assets. And in the end there’s no further court, nothing about the trust has to be made public (in a probate case with a will, the probate is a public record and anyone can see your will and probate case.) and just how much there is and where it goes does not become public either.

The peace of mind that comes with knowing that things are taken care of and a plan is in place so no one has to guess or argue about what you would have wanted is huge.

Death is hard. But we can handle hard things together.