Start estate planning with this checklist

Estate planning is essential for securing your loved ones’ future, ensuring your wishes are honored, and preventing potential disputes. However, figuring out where to start can be overwhelming. This checklist provides a structured approach to help you begin and stay organized throughout the estate planning process.

Our estate planning checklist is designed to guide you through the process, outlining the documents and protections you need to consider. As you work your way through the checklist, you’ll be taking important steps to ensure the financial protection of assets.

Your comprehensive estate planning checklist

Let’s dive into the steps you should take to ensure all your bases are covered.

1. Make a list of your assets

Start by gathering all the information you have about what you own. This will form the basis for the entire estate plan. Be sure to include the following:

Bank accounts. Include all savings accounts, checking accounts, certificates of deposit (CDs), and any other financial instruments held in banks.Real estate. Account for all properties you own, such as homes, vacation homes, rental properties, and land.List all investment holdings, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), retirement accounts (IRA, 401(k), etc.), and any other securities.Business interests. If you have ownership stakes in businesses or partnerships, whether small or significant, make sure to record them.Life insurance policies. Document all active life insurance policies, along with their policy numbers, coverage amounts, and beneficiary designations.Other assets. Consider any other assets with monetary or sentimental value, such as valuable collectibles, art, jewelry, antiques, vehicles, and intellectual property.

Take the time to gather supporting documentation, such as account statements, property deeds, stock certificates, and policy documents. This inventory will serve as a reference when you start to make decisions.

2. Choose an executor

An executor plays a crucial role in your estate planning, as they will be responsible for managing your estate affairs after your passing. This individual holds the following key responsibilities:

Handling paperwork. The executor initiates the probate process, if required, by presenting your will to the court for validation and ensuring its proper execution.Managing assets. They take charge of your assets, including property, financial accounts, and investments, ensuring their safekeeping until distribution to beneficiaries.Settling debts. The executor works to settle any outstanding debts and financial obligations, including paying off creditors and finalizing loans.Enforcing your wishes. It is their duty to carry out your explicit instructions as stated in the will, which includes asset distribution, charitable contributions, and guardianship of minor children, among other directives.

Given the significance of this role, it is vital to choose an executor whom you trust wholeheartedly to fulfill these responsibilities diligently. Take time to consider their availability, organizational skills, and willingness to take on this crucial duty.

3. Create a will

A will is the cornerstone of any estate plan. It allows you to specify how your assets should be distributed after your passing. When creating a will, you should:

Designate beneficiaries for your assets, including financial accounts, property, and personal belongingsChoose an executor who will oversee the distribution of your assets according to your wishesSpecify guardians for any minor children to ensure their well-being and careAccount for any other circumstances that require special consideration

4. Set up trusts

Setting up a trust can provide several benefits, particularly in circumstances in which you have substantial assets or anticipate a significant inheritance. Trusts offer more control over asset distribution and protect against potential taxes, creditors, and lawsuits, making them valuable for estate tax planning and asset protection.

For example, a trust can be set up to hold assets for minor children or beneficiaries with special needs, allowing funds to be held and managed without going through court proceedings. Trusts can also be used to manage investments, distribute income from a business, or provide charity donations over time.

You might consider the following types of trusts:

Revocable living trust: Allows you to maintain control of your assets throughout your lifetime and specifies how they should be managed after your passing. This trust helps bypass probate, potentially saving time and money for your beneficiaries.Irrevocable life insurance trust (ILIT): Can be used to exclude life insurance proceeds from your taxable estate, providing a tax-efficient way to pass on wealth to your beneficiaries.Charitable trust: Enables you to support charitable causes while also providing tax advantages for your estate.

How you divide your assets is up to you. You can consult with an estate planning professional for more specialized advice.

5. Establish power of attorney

A power of attorney (POA) grants someone you trust the legal authority to act on your behalf in financial and legal matters if you become incapacitated. You should have both a financial power of attorney and a healthcare power of attorney (also known as a medical power of attorney or healthcare proxy) to cover all aspects of decision-making.

POA is separate from your will or trust. Valid from the moment you sign it, POA grants someone immediate access to your assets and medical records. This holds true even if you become incapacitated and unable to make decisions on your own. Be sure to choose someone you trust wholeheartedly, as they will have significant decision-making power.

6. Set up a living will and healthcare directives

A living will is a document that outlines your wishes for end-of-life care, such as whether you want to be resuscitated or placed on life support. It should include all relevant details about your medical care preferences. A living will should also cover issues such as organ donation, power of attorney for healthcare, and funeral arrangements.

A healthcare directive is a document that covers your medical wishes if you become incapacitated. It enables you to designate someone to make decisions on your behalf and specify what kind of care you want in certain situations, such as the administration of life-sustaining measures or end-of-life care.

In some cases, a living will and healthcare directive may be combined into one document. Your healthcare provider can provide more information on the specific documents available in your state.

7. Purchase life insurance

Life insurance can provide financial protection for your family in the event of your passing. There are two main types — term and permanent. Factors to consider:

Coverage amount. Evaluate your financial obligations to determine the appropriate coverage to support your loved ones.Term length (for term life insurance). Choose a term that aligns with your dependents’ financial needs.Long-term goals. Consider your future financial goals when deciding on policy terms. Your goals may include retirement planning, college savings, and estate planning.Consider premiums that are affordable for you and your family.Riders or add-ons. These additional benefits can provide flexibility to the policy by addressing specific needs such as disability income protection or critical illness coverage.

8. Do end-of-life planning

When finalizing your estate plan, consider any specific instructions or wishes you have for your final arrangements. This may include funeral or memorial service details, burial or cremation instructions, and any religious or spiritual matters to be observed.

It’s wise to provide detailed information on these topics in writing so your loved ones don’t have to speculate about what you would’ve wanted. If possible, make sure there is sufficient funding available to cover the costs of your final arrangements.

9. Keep your estate plan updated

Once you have created your estate plan, keep it current and relevant as your circumstances change. By implementing a proactive approach, you can ensure your plan will more accurately meet your needs and provide the most benefit for you and your family.

Schedule regular reviews: Set yearly calendar reminders to review your estate plan, discussing any necessary updates with your partner, spouse, financial advisor, or lawyer.Inform your beneficiaries and executors: Keep your beneficiaries and executors informed of the location of important documents and any changes made to the estate plan.Secure document storage: Maintain your estate planning documents in a secure place easily accessible to those who need them. Consider using cloud storage services for added convenience and security.

By regularly taking steps to review and update your estate plan, you can effectively safeguard your interests and provide for your loved ones according to your wishes.

Start estate planning with this checklist