We Americans are fiercely independent, are proud of it and want to be left alone to run our lives. That’s who we are.
That’s not earth-shattering news, I know. But what is surprising is that 42% of boomers, 64% of Gen Xers and 78% of millennials are in a situation where the government – more specifically, a court – will make all their decisions. This includes who will live in their homes, sleep in their beds and spend their money after they pass.
This potential complete government control exists because the numbers I just quoted for the boomers, Gen Xers and millennials are the percentages of those populations who don’t have a will. And when you die without a will, it is a complete stranger who will make all of your estate decisions for you.
The excuses people offer for not preparing for their final exit include things as silly as “I’ll let my heirs fight it out,” “I don’t care once I’m gone,” “There’s not enough to worry about” and similar uninformed reasons.
What might surprise many of you is that the average net worth of U.S. households is $692,100. Even the median net worth is $97,300. In either case, that’s a lot of money to let a complete stranger decide who’s going to get it.
And yes, legal fees for setting up estate plans, or even a simple will, can be significant. My most recent will, which is quite basic, cost $1,000.
But there’s another option called a transfer on death (TOD) that is free and incredibly simple to set up. It bypasses probate and requires only a death certificate to activate after your passing. In most cases, a TOD can handle the transfer of almost every asset the average person owns.
And setting up a TOD requires no more effort than designating a beneficiary on a 401(k) or IRA. But unlike a retirement account, you can also designate more than one beneficiary and specify the percentage each is to receive. This comes in very handy with brokerage and bank accounts.
Unlike retirement accounts, though, the beneficiaries listed in a TOD will know before your death what they will be receiving. But no one has access to any of your assets until you pass.
Laws governing TODs vary from state to state, and banks and brokerages usually have their own ways of setting them up. But being able to pass on all or most of your assets at no cost with the assurance that they will be handled exactly as you want them to be seems like it would be worth the effort to look into.
As with all tax and estate issues, it’s always a good idea to consult your attorney before you do anything. But do something. Having a complete stranger decide who gets what you spent your entire working life accumulating is not how I want to leave things.