Minnesota residents may be taken aback to hear the phrase “death cleaning”. However, in fiscal terms, it simply means taking steps to simplify and organize a person’s financial life. This may make it easier for an individual to manage money while alive and easier for surviving family members to handle an estate after that person dies.
Research has shown that financial judgment peaks at age 53 while mental decline is more likely to occur at age 60 and older. Among other actions a person can take, it may be a good idea to consolidate retirement accounts into a single IRA or maintain a current 401(k) while consolidating older accounts. It is generally easier for an individual to keep track of his or her money when there are fewer accounts to keep an eye on.
Making automatic payments may reduce the likelihood that a person gets behind on one or more accounts. Keeping current with mortgage or other debt obligations may eliminate the need to pay late fees or higher interest rates. Those who aren’t confident in their ability to manage money may want to appoint someone to help oversee their finances.
For most people, planning their estate may be best viewed as a long-term process. As life events take place, it may be worthwhile to review beneficiary designations or consolidate retirement accounts. It may also be a good idea to grant powers of attorney over both financial and health care decisions. This may allow an individual’s wishes to be respected even if he or she becomes incapacitated. An attorney may be helpful in drafting these types of documents.