11 Simple Steps to an Estate Plan

11 Simple Steps to an Estate Plan

by Michelle Fabio, Esq., July 2016

A solid state plan is one of the best things you can have both for yourself and for 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 as you prepare your end of life documents.

1. Make A Will

Estate planning basics start with the importance of having a last will and testament. Simply put, without a will, you will die intestate, which means the government will distribute your assets according to your state’s law, which may not be how you would have liked the process to go.

Your first step, then, is to draw up a will, and in order to do that, you must think about all your assets and who you would like to receive them (beneficiaries).

2. 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 would also need someone to handle property or other inherited assets, so be sure to name someone to handle the financial affairs of your children as well. This person can be the same as the physical guardian, though it doesn’t have to be.

3. Make A Living Will

A living will, sometimes called an advance directive, 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 yourself. You can include instructions regarding the use of life-sustaining measures such as feeding and breathing tubes.

4. 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 as well as a durable POA to handle your finances. 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).

5. Think About A Living Trust

A living trust is a written legal document through which your assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a "successor trustee."

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

6. Consider A Life Insurance Policy

Parents of minor children and homeowners, especially, should consider having life insurance policies.

You may also want to look into getting life insurance if you anticipate your estate having to pay a large amount of debt or estate taxes. This would be to help make sure that your heirs still receive the property you would like them to get without having to use portions of that to pay off your debts.

7. Make Sure Your Beneficiary Names Are Correct And Up To Date

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

Additionally, by naming a beneficiary on your bank and/or retirement account, those funds can automatically be paid upon your death to the named person instead of having to go through the probate process, again saving both time and money for beneficiaries.

8. Make Sure You’ve Addressed Estate Tax Obligations

Although you’ve probably heard dire statements about the “death tax,” the truth is that the vast majority of estates will not owe any federal estate tax. This is because only those estates worth over $5.43 million (as of 2015) are subject to federal estate taxes. Still, if you are anywhere near this number, you should make sure you have your bases covered.

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

9. Get Your Digital Assets In Order

Most of us now have online accounts, including email, Facebook, bank, PayPal, etc. While you may not care what happens to some of them after you pass away, it’s still a good idea to sit down, make a list of all of them along 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.

10. Consider Leaving Instructions Regarding Your Remains

One of the biggest 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 body whether it be cremation or burial.

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

11. 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!

Still not sure which estate planning documents you need? This tool can help you decide. If you need more than one estate planning document, the LegalZoom estate planning package is an affordable option that offers two last wills or a living trust, a living will (advance directive), power of attorney, plus one year of legal advice from an independent attorney.