your money when you die


Since it’s October and we’re talking about all things spooky, I thought it was high time we chatted about what happens to your money when you die. If you are reading this, there is a good chance that you are younger than 40, are riddled with student loan/other debt and you might think you don’t have a lot of assets. (if you aren’t in that category, please don’t feel excluded! you are still in the right place). Thus, planning for what happens to your money when you die might not feel like the biggest concern at the moment. But as you are likely well aware, at some point, you are going to die. And you most likely aren’t going to know when exactly that will happen. Could be today. Could be tomorrow. (Too morbid? Sorry.) Could be 100 years from now. (That’s better.) By failing to plan what happens to your things, you are going to stress someone(s) in your life out at your death.

Case in point: I had a dear friend die a couple of years ago. She left behind a husband and two kids. Because they were young and just starting out, she and her husband hadn’t created a will, trust, or any other kind of testamentary document. My friend had a few bank accounts that she’d received as an inheritance before she was married to her husband. The husband wasn’t named on any of the accounts and since there was no document leaving the accounts to the husband, those accounts had to go through probate. This means that the husband had to spend quite a bit of time and money going through the probate process dealing with that issue, when he was also grieving and trying to navigate being a single dad. In the end, because of state laws, he got half of the accounts and the other half went to her mom, whom she’d been estranged from for many years. Probably not the outcome she would have wanted.

Think about it. You probably make plans in tons of other areas of your life. You might plan vacations. If you have kids, you may have made a birth plan. Perhaps you made a plan to get the degree you have. Maybe you have a life plan– a time line of when you want to get married, have kids, etc. I plan my family’s dinners each week so that when hanger strikes, it is not the end of the world at our house. I plan my work week. So just like in all these other contexts, you need a plan for what happens to your money when you die. And not just your money, but your things and especially your children if you have any.

If you have a plan for what happens to your money when you die, you will make life much easier on your family and loved ones while they are mourning your death. Further, you’ll simplify the process and save your family/loved ones time and money. You’ll minimize family conflicts which are bound to occur in the absence of a document memorializing your wishes. If you died today, would your loved ones know what happens to your:

  • Children (and pets)
  • Liquid assets (bank accounts, cash on hand etc.)
  • Other assets (real estate, car, etc)
  • Tangible things that may have sentimental value (a necklace your great grandmother left to you)

If not, start today by forming a list of who gets what at your death. I’ve created this FREE easy to use document to help you get started. I definitely recommend that this be just your starting point. Sit down (if you are married, be sure to include your spouse) and list every item you own that you wish to leave behind to your loved ones. Be sure to list the loved ones to whom you wish your things to go. The document will explain in more detail. Grab “WHAT TO DO WITH MY MONEY AND THINGS WHEN I DIE” here.

So if you don’t plan, what happens to your money when you die? 

You’ll die “intestate,” meaning without a will or testamentary document. As such, some probate judge will get a very big say in what happens to your things, including guardianship of your children.
People that you don’t know will be put in charge of managing your assets.
The legislature will take control of the management of your assets. Each state has its own statutes governing the management of property that is left intestate.
Your assets can end up with family members/people that you didn’t want or expect.
You lose privacy (since the information will be public in probate court)
Family member disputes are highly likely. And when I say highly likely, I mean almost positively certain. You might have great relationships with your siblings, parents, and other family members, but family money and things can create HUGE rifts in families. During my judicial clerkship (where I was basically a staff attorney for a judge for one year after I graduated) my judge had a case where a mother died, leaving a $1 million estate to her four children. The children (who were adults in their 50’s) seemed to begin with a normal/good relationship, but over the MANY years it took for their case to go through probate, they squandered practically all of their inheritance in court costs and legal fees. They bickered over small/old items the mother left behind, like desks and armoires. So, to the extent you can plan what happens to the stuff you leave behind, that is the extent to which you’ll leave your family in peace when you go. And that’s really the greatest legacy anyone can leave.

What about you? What is the hardest part about dealing with your money before you die? I’d love to hear from you! 

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your money when you die

*Hey! While I am an attorney, I am not your attorney (unless you’ve signed an engagement agreement with me over here). I do not do estate planning. The above is not legal advice and shouldn’t be construed as such. These are intended to be general personal finance tips to help you figure out your finances for when you die. For estate plans, I always recommend contacting an attorney in your area to help you. 🙂

2 thoughts on “YOUR MONEY WHEN YOU DIE

  1. I am just going to add before you name a guardian for your children in your will make sure you ASK the person first if they would be willing to raise your children should the need arise. I have actually known people who were planning on listing someone and didn’t think they needed to ask because hey, the odds were they wouldn’t need it and they were sure the person they named would want their kids anyway. They were advised, no, you really need to ask them first.

    1. Yes! Very good point. That person will definitely get a say in whether they want to become the guardian so it’s best to know if they’re ok with it before you aren’t there.

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