Taking an Inventory
Over time, we all end up collecting things. Some are cherished heirlooms, while others are simply personal mementos.
Some items might be intended to be part of an inheritance, while others are to be donated. A will delineates where it all goes. But first, someone has to find it all. That’s why creating an inventory of your belongings is so important.
PERSONAL ITEMS
These inventories help ensure that your will can be quickly executed. But the list also helps you formulate an idea of the estate’s overall worth. Household staples like furniture, jewelry, televisions and other expensive items will immediately come to mind. But it’s best to go room to room, making a detailed list of everything and its estimated worth. Most people remember to catalog the car, but don’t forget other outdoor items like power tools and lawn equipment.
An appraisal may be needed for certain collectibles; there may be a hidden treasure inside your home. You typically should only list belongings that are valued at more than $100, but this itemizing process can also reveal a list of more personal things that might make for a meaningful gift to loved ones.
All of those should be listed, no matter their value.
FINANCIAL HOLDINGS
Now that you’ve cataloged all of the belongings inside your home, itemize all non-physical assets. List all bank accounts, whether held jointly or separately, as well as 401(k) plans, life-insurance policies, IRAS, stocks and bonds, and any insurance policies. (That should include homeowners, auto and health.) A qualified financial advisor can help you define the worth of these inventoried items.
DEALING WITH DEBT
You’ve defined your assets, now it’s time to account for personal debt. Those responsibilities don’t go away, though they occasionally can be partially forgiven. List any outstanding bills, including mortgages or car notes, credit cards and medical bills. Non-married family members don’t have to pay these debts with their own money, but their deceased relative’s estate may be liquidated in order to meet the obligations. An executor manages that process. Spouses can be held personally responsible for co-signed obligations, or if they live in community-property states. Any leftover bills after estate finances have been depleted usually go unpaid.