According to LegalZoom, over half of Americans, or 56%, think estate planning is important for end-of-life planning. So, even though this process can feel overwhelming, taking thoughtful steps now can ease the burden for your loved ones later on.
One way to make the process more straightforward is to organize your financial matters. This includes setting up clear methods for disbursing funds, like using paper checks. By being proactive with these details, you not only make the process easier but also give your family peace of mind, knowing that everything is in order.
How to Use Checks in Estate Planning
Recent data shows that American retirees plan to transfer over $36 trillion in wealth to family members and other beneficiaries over the next 30 years.
As families prepare for this significant wealth transfer, they may look for straightforward, reliable ways to distribute assets to their loved ones. Checks are often the tool for the job, ensuring payments are properly tracked and written in accordance with the wishes of the estate. They are highly versatile for executing various estate planning tasks, including:
- Enabling asset distribution to beneficiaries according to the will or trust
- Covering expenses like any outstanding debts or taxes from the estate
- Making trust disbursements to beneficiaries on a scheduled basis
The Benefits of Using Paper Checks in Estate Planning
Checks can play an important role in your estate planning, ensuring a simple and traceable way to manage disbursements from estates or trust funds. Here are some of the main advantages paper checks provide in these scenarios:
Transparency
In any setting, paper checks are often favored over other payment methods because of the clear paper trail they create. This is one of the reasons why they’re so beneficial in estate planning and trust funds. Checks help to ensure transparency when transferring assets according to the estate and enable simplified record-keeping for the estate’s executor.
For instance, if the trustee needs to distribute $50,000 to three beneficiaries, using checks and keeping a copy of each will show exactly when the funds were disbursed, how much, and to whom in case any disputes or questions arise later. This will show that disbursements were made according to the estate’s plan.
Control and Security
Another benefit of using checks is that they allow greater control over how and when disbursements are made. Unlike electronic payment methods, checks must be manually approved and completed, requiring careful review before issuing. In other words, checks give executors and trustees an extra layer of security, preventing premature or unauthorized disbursements.
Let’s say an executor must distribute funds to multiple beneficiaries based on different conditions and timelines. So, if one beneficiary will receive $70,000 after a specific process is completed, the executor can ensure all conditions are met before making the distribution.
Personal Touch
Aside from the practical reasons for using checks in trust funds and estate planning, they can also add a personal touch to the process. Custom notes or memos attached to the check can make transactions feel more meaningful.
For instance, a check’s memo might be “in memory of Dad” or “college tuition from Grandma and Grandpa”. Even though the message is short, it can still help the process feel more human during the beneficiaries’ period of loss.
