Estate Planning Checklist

Estate Planning Guide

Having an estate plan is important to protect your loved ones and assets. No matter how simple or complex your financial holdings and goals may be, there is a form of estate planning that can meet your needs. Taking the time to understand the various types of estate planning documents available is key to making informed decisions about which will prove to be the most beneficial for your specific situation.

Whether you choose to manage the process yourself or enlist the help of a qualified estate planning attorney, it is essential to familiarize yourself with the options available. From setting up a will to outlining directives to family members to utilizing trusts, there is much that should be considered when crafting an effective estate plan. Taking proactive steps to ensure that you are well-informed can avoid many common pitfalls when attempting to manage this important task without adequate preparation.

At the end of the day, it’s important to remember that “those who fail to plan, plan to fail.” Without a comprehensive estate plan, the unfortunate consequences can far outweigh any potential cost of estate planning. An experienced probate attorney can offer personalized guidance on how best to protect your assets and preserve your wishes, now and in the future.

Estate Planning Basics

A well-informed estate plan should provide for what happens in the event of both death and disability. It is a thoughtful process that requires an individual to consider their goals, wishes, and values to determine what will be done with their property upon death, the financial needs of their family, how to reduce or avoid probate taxes and other estate liabilities, and guardianship of minor children, as well as medical treatment planning.

Additionally, one must identify proper asset ownership arrangements, designate beneficiaries where appropriate, and execute necessary documents to meet all desired objectives. Planning ahead has numerous advantages, such as peace of mind, protection for loved ones, and a smooth transition for the generations that follow. Properly structured plans can minimize legal costs, taxes, and conflict among beneficiaries. Hence it is wise to consult a legal professional or financial planner to navigate this complex landscape.

Plan Your Asset Ownership

Any asset with title documents (real estate, motor vehicles, etc.) can be set up so that upon your death, the title automatically passes to a co-owner. Most often, this is a spouse. The title document must indicate that ownership is held as joint tenants with rights of survivorship, as tenants by the entireties, or as community property.

There are two potential downsides to adding someone as a joint owner. First, you will need the joint owner to agree to any sale of or loan secured by the property. Second, if the property’s value exceeds a certain amount, it could trigger the federal gift tax.

Determine Beneficiary Designations

For some assets, you can designate someone to receive the property upon your death without giving them any current ownership rights. This is often done with the bank and other financial accounts (usually called pay-on-death or POD). Designating a beneficiary is available in almost all states for brokerage accounts and in some states for real estate, motor vehicles, and other assets with title documents (usually called transfer-on-death or TOD).

Cover Your Debts With Insurance

One way to ensure that all of your debts (including burial expenses) are paid in the event of death or disability and that your loved ones are provided for is through auto, homeowners, disability, and life insurance.

Get A Last Will and Testament

A last will and testament takes care of any property that must be probated. A last will can also deal with caring for any minor children (or adult children with disabilities). You designate who will get any property that hasn’t been handled through joint ownership or a beneficiary designation, appoint someone you trust as the executor of your estate, and appoint someone you trust to be the guardian or conservator of your minor or disabled children.

Consider A Living Trust

Especially if you have a large estate or many beneficiaries, a living trust is usually the best choice for handling the distribution of property, avoiding probate, and minimizing estate taxes. To avoid probate, most people create a revocable living trust (“revocable” since you may revoke the trust at any time). Property title is transferred from you to the living trust, and you become the trustee. While you are still alive, you control the property. You manage the property as if it was still in your name (sell or mortgage it, for example), and may acquire more property and add it to the trust.

Upon death, a person you appoint as your successor trustee assures that the property is transferred to those you designate as trust beneficiaries. This transfer does not require probate. The successor trustee will also manage the trust if you become mentally incapacitated. People sometimes create an irrevocable living trust (most often for Medicaid planning), which also avoids probate but requires the person creating it to give up the right to revoke it.

Consider a Financial Power of Attorney

A financial power of attorney is an important legal document that authorizes another person you trust to make decisions on your behalf regarding financial affairs. The principal grants the authority, and the agent or attorney-in-fact is responsible for acting on the principal’s behalf. Many states have official forms for establishing a financial power of attorney.

A power of attorney can be used immediately upon signing, or it can become active at the time of the principal’s mental incapacity. If a POA is made effective immediately, its agent has the authority to act even if the principal is still able—which makes clear that its purpose is to plan for unexpected situations. These immediate POAs are commonly known as springing powers of attorney since they “spring” into action in case of an unforeseen event. A power of attorney remains in effect until the death of the principal.

Consider A Health Care Power of Attorney

If you are ever in the unfortunate situation of being unable to make decisions about your healthcare, it is important to appoint someone you trust to take over that responsibility. By creating a health care power of attorney, you can designate this individual and give them the authority to make decisions on your behalf.

When selecting a healthcare agent—sometimes referred to as a surrogate—, it is essential to discuss your desires for medical treatment. Your healthcare agent will act on your behalf according to the medical choices you have agreed upon together and should always honor your wishes.

Get A Living Will

Having a living will is an important component of estate planning. If you become terminally ill or injured and cannot communicate your wishes, a living will ensure that your desires regarding life-prolonging medical treatments are respected. This document can also guide your agent in health care matters, allowing them to make decisions in line with your end-of-life wishes even when you cannot provide instruction. Typically, a living will go hand-in-hand with a healthcare power of attorney for maximum protection.

Letter of Instruction for Executor and Statement of Desires

Ensuring your wishes are fulfilled upon your death is an important part of being responsible. A last will is a legally binding document that guides the executor, which will turn it into action. However, another document you can create that does not require a lawyer but also ensures all your affairs are in order: The Letter of Wishes.

This letter provides valuable information and guidance to the executor. It should include the information necessary to accurately identify and locate all your financial accounts like your bank, insurance policies, credit cards, and loans. Additionally, it should list contact information for relatives and close friends to be informed of your passing and any special locations of assets, such as safe deposit boxes or storage units. Finally, the letter should contain instructions regarding your burial desires, such as cremation, funeral ceremonies, organ donation, etc.

Creating this letter is an important step that should not be neglected. This knowledge helps your executor fulfill your wishes and ensures a smooth and uneventful transition following your death.

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