11 Simple Steps to an Estate Plan

A solid estate plan is one of the best things you can have for yourself and your loved ones. 

Feeling confident that your valuable assets and prized possessions will go to the people you choose can offer you enormous peace of mind now—and you can't underestimate what a gift you will be giving later to family and friends who will not have to make tough, stressful decisions during a difficult time of grieving.

Estate planning doesn't have to be complicated, especially if you follow the 11-step estate planning checklist below to prepare your estate planning documents.

Make a last will

The basics of Estate planning start with the importance of a last will and testament. If you die intestate (i.e. without a last will), the government will distribute your assets according to your state's law, which may not be how you would have liked the process.

To get started on a last will, you must think about all your assets and who you would like to receive them (beneficiaries).

Think about a living trust

 A living trust is an alternative to a last will because it lays out who will receive your assets after you pass away. Once signed, you transfer ownership of your assets into the trust and you remain in complete control of your property.

One of the main benefits of living trusts is that property contained within them does not have to go through probate court, instead passing directly to beneficiaries. This can mean savings of both time and money for your loved ones.

Make sure minor children are provided for

If you have minor children, you can use your will to name a guardian for them in the event of your death and the death of your children's other parent.

Don't forget that your minor children and dependent children will also need someone to handle property or other inherited assets, so be sure to name someone to handle your children's financial affairs as well. This person can be the same as the physical guardian, though it doesn't have to be.

Make a living will

Sometimes called an advance directive, a living will is a legal document that provides instructions regarding the medical care you wish to receive should you become incapacitated or seriously ill and cannot communicate your preferences. You can include instructions regarding using life-sustaining measures such as feeding and breathing tubes in your living will.

Make a power of attorney

A power of attorney or POA gives the person you choose the authority to make decisions if you cannot. You should have a power of attorney for health care and a durable power of attorney to handle your financial affairs. Again, these can be the same person, although they don't have to be, and your POA does not have to be an attorney (despite the legal name for this document).

 A living trust is an alternative to a last will because it lays out who will receive your assets after you pass away. Once signed, you transfer ownership of your assets into the trust and you remain in complete control of your property.

One of the main benefits of living trusts is that property contained within them does not have to go through probate court, instead passing directly to beneficiaries. This can mean savings of both time and money for your loved ones.

Consider a life insurance policy

Most people can benefit from having a life insurance policy, which will pay benefits to your chosen beneficiaries upon your death.

Make sure your beneficiary names are correct and up to date

Make sure that you double-check all of the beneficiaries you name in your will, trust, or life insurance policy are correct and up to date.

Make sure you've addressed estate tax obligations

Although you've probably heard dire statements about estate and inheritance taxes, the truth is that the vast majority of estates will not owe any federal estate tax. This is because only those estates worth over $12.92 million (as of 2023) are subject to federal estate taxes. 

Still, if you are near this number, you should ensure your bases are covered. Consider speaking to an estate attorney, tax advisor, or financial planner if you need legal or tax advice for your estate plan.

Moreover, be sure to find out whether your state has any death and inheritance taxes that might also affect your estate; some states have a lower threshold amount than federal estate taxes.

Get your digital assets in order

Most of us have online accounts, including email, Facebook, bank, and PayPal. While you may not care what happens to some of them after you pass away, circumstances change. It's still a good idea to sit down, list all of them with logins and passwords, and give someone you trust the authority to access your digital assets after your death and act according to your instructions.

Consider leaving instructions regarding your remains

One of the most significant expenses when someone dies is the funeral, and one way to keep costs down for your loved ones is to arrange for yours ahead of time. You can set up a payable-on-death bank account for this purpose or pre-pay for your funeral. Remember to include, too, your preferences for the disposition of the body, whether it be cremation or burial.

Another consideration you may want to address in your end of life documents is organ and body donation.

Store your estate plan paperwork in a safe place

Now that you've gone through all the hard work of getting your estate planning documents in order make sure they are in a safe place and that the executor of your will and/or your POA know where to find them.

This short estate planning guide will help you prepare the documents you should have to protect your family—and remember, there is no time like the present to start the process.