When I entered high school, I remember sitting down with my dad and discussing financial responsibility. I had actually been working since I was 8 (I worked on a goat farm, yes, I am Heidi in real life), so I already valued work, but what my dad wanted to talk about were my “needs” and “wants”. This meant when I went to the drug store or grocery shopping with my mum after flute lessons, and I needed things, I had to determine if they were true needs or if I just wanted them. Things like toiletries I used regularly were needs. Buying new songs on iTunes or getting new nail polish, those were wants. For wants, I was only allowed to get so many things a month and I had to think about what I had already asked for, and some things I would pay for out of my money from the goat farm. Of course, I tried to argue that books were needs, but I only occasionally won that battle!
As I got older and started driving myself at 16, I was given a credit card. When I made purchases, I had to take the receipts and let my dad know which of the line items were needs and wants, and we would settle up at the end of each month. This exercise truly taught me how to think about spending, and it ensured my spending was simplified because I thought about each purchase.
What does this have to do with estate planning though? A lot. One of the most important things that estate planning deals with are assets. When you die, we need to know what assets you have, what institution they are owned through, and how they are to be handled. The more assets you have and the more institutions that are involved, the more work your loved ones have when you die. And before that, there is a whole lot more work for you that goes into aligning those assets with your estate plan.
We’ve talked about our SAVeTTM Process before: simplify, align, verify, and track assets. There is a reason that simplification is the first aspect of our SAVeTTM Process. Asset consolidation is an extremely effective way to simplify your life now and make things easier for your loved ones after you die. Major stress and frustration are caused for grieving loved ones when they have to run around to numerous institutions in order to get affairs in order. Every intuition has its own idiosyncrasies, which means there is more complication when you need to make changes to your estate plan now and increases the amount of time it takes for your family to deal with each separate institution later. Simplifying and consolidating your assets streamlines the process by pairing down the number of institutions and reducing the asset chasing loved ones have to do.
Now, let’s come back to the idea of “needs” and “wants”. When you approach simplifying and consolidating your assets, use the needs and wants approach. What assets do you need and what do you want or think you need? You may have old accounts hanging over that you might have needed at one point in your life that you don’t now. Do you need three bank accounts at three separate institutions? Or could you put all the money into one account and actually have a simpler life now? By going over your assets with your estate planning attorney and your financial advisor, you can examine them with a critical eye. This is not to say you have to throw out all the want assets, but you will want to pair them down.
By distilling your assets down to primarily “needs” you will make establishing and ongoing alignment of your plan easier now and make executing your plan later after your death much easier and streamlined. Estate planning is about protecting your family, so make the grieving process easier for your loved ones by simplifying today.
If you want to brush up on consolidation and SAVeTTM, check out these blog posts, Save Time, Save Hassle, SAVeT™; Vlog: Why Consolidation is Key to Successful Estate Planning; and Marie Kondo and Your Estate Plan.