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Estate Planning Checklist
If you want to make life easier for your loved ones after you’re gone, you should create an estate planning checklist. It’s not as hard as you might think. And by having one you will save those you care about from a load of trouble.
Of course, determining who should inherit your property involves confronting your own mortality. That can be an unpleasant and off-putting undertaking. As a result, more than 64% of Americans don’t have a will, according to a 2016 survey by legal services provider Rocket Lawyer. And a will is a central part of any estate planning effort.
Over the years, several high-profile figures died without a will. The most recent is pop star Prince. Headlines about wills kept popping up years after billionaire Howard Hughes’ death in 1976. Entertainer-turned-U. S. Rep. Sonny Bono also died without clear directions. Doing so complicated the lives of those left behind.
This doesn’t have to be you, too.
- How To Retire In Style
- Retirement Planning Guide 2018
Estate planning is the process of thoroughly preparing for the inevitable. It’s also a chance for investors big and small to control how they pass on their financial legacy.
“An estate plan is essentially a preparation to deal with the choices you want made if you become unable to make decisions for yourself, or if you pass away,” said Jeff White, a legal analyst with business publication in New York.
What Is The Purpose Of Making An Estate Plan?
Many people think estate planning only includes drawing up a will. That’s the document that details how you want your assets to be divvied up after you’re gone.
Actually, a will is just one part of the estate planning checklist. An estate plan is also a person’s chance to outline what medical treatments they want to receive if they become incapacitated.
“For example, if you don’t want doctors to keep you alive in the event doing so would make you unable to do things for yourself, then a living will is the part of your estate plan that will stipulate that,” said White. A former associate with an estate planning firm, White now lectures on estate planning and other legal topics.
What happens if you die without a will? “Then your estate will go through probate court, which could require your loved ones to spend a lot of time and energy trying to get what is rightfully theirs,” White said.
Why Is it Important To Have An Estate Plan?
Probate is the court-supervised process of paying your debts and then passing your property to the people you choose. The probate process includes lawyer and court fees. The total can cost between 4% to 10% of the value of your estate, White says.
And a court won’t “always reflect what you want,” said Liza Hanks, an attorney and certified estate planning specialist and partner at GCA Law Partners LLP in California.
“If you’re in a second marriage and you’ve got kids from different marriages, you need to put a plan in place to make sure you balance the needs of your current spouse and your kids from a prior relationship,” Hanks said.
Before starting the estate planning checklist, people should first complete an inventory of all their assets. That includes bank accounts, 401(k), individual retirement accounts and other retirement accounts. It also includes real estate, investment accounts, ownership in a business and inheritances received, says Jason Largey, senior estate planning strategist at Personal Capital.
What about people with children under age 18? The estate plan can also establish who will become guardians should the parents become unable to fulfill that role.
What Can An Estate Plan Do For You?
More and more, people are even using estate planning to show who is authorized to manage digital files. This includes being able to access and delete email and social media accounts.
“We encourage our clients to come up with a list of all of their online accounts and make sure the login IDs and passwords are there and update that every six months,” said Abigail Gunderson, a wealth advisor and estate plan specialist at Tanglewood Total Wealth Management in Texas. Then, pick someone — typically an heir or surviving spouse — who knows the location of the list. Make sure you authorize that person to access your financial accounts to ensure any bills are paid, she says.
Regardless of your age, health status or level of wealth, experts suggest setting up an estate planning checklist that includes these documents:
Estate Planning Checklist
- Durable Power of Attorney for property management. This gives the person that you designate the power to take personal actions for you. Those actions “relate to finances or taxes or what have you” after you pass away or have lost the ability to handle those duties on your own, says Steven Trytten, an attorney who specializes in estate planning for Pasadena, Calif.-based Anglin, Flewelling, Rasmussen, Campbell & Trytten LLP.
- Advance Health Care Directive, sometimes called a Health Care Power of Attorney. These documents spell out instructions for your medical treatment should you become incapacitated and unable to make those decisions for yourself. They also give you the opportunity to say whether you want to undergo use of life support or participate in organ donation.
- Living trust. This legal document places your assets into a trust for your benefit while you’re alive and then transfers remaining assets to your designated beneficiaries after you pass away. Trusts are overseen in accordance with your wishes and by the trustee you select. Property left through the trust doesn’t have to go through probate court, and will reach inheritors more quickly, according to Nolo.com.
- Will. A will allows you to identify the people or organizations that will receive your assets after you die. It also allows you to designate an “executor,” who is legally responsible for making sure your outstanding debts and taxes are paid and then distributing the rest to the heirs you’ve identified.
Do Lawyers Help With Estate Plans?
Neither a will nor a trust will supersede any beneficiary that’s named on life insurance policies or retirement accounts. That includes IRA or 401(k) plans.
How much does it cost to have an attorney draw up a will, trust and related documents? For a typical couple who have total assets of about $1 million to $6 million, the cost could run $5,000 to $6,000, says Trytten.
You can find attorneys with experience in estate planning through personal recommendations. You can also check with the American College of Trusts and Estate Council.
