A Simple Guide to Estate Planning

When you hear the term “estate,” you may think of the property you own. While that’s an accurate definition, but not the only one. When it comes to estate planning, your estate refers to everything you own — real estate, home(s), car(s), liquid assets (cash), furniture, momentos … the list goes on and on. And, while it may not be the easiest thing to think about, it’s a good idea to have a plan in place of what should happen to these belongings after you pass away. You can use this estate planning checklist as a starting point.  

What Is Estate Planning?

Estate planning is simply what it sounds like — planning what should happen with your estate (or belongings) and everything important to you when you die. After all, you can’t take any of these things with you, but you can pass them on to your loved ones or organizations/places close to your heart. In order to ensure this happens the way you want, it’s important you have an estate plan in place.

Estate planning doesn’t stop with material objects — if you have young children, part of the process will be to establish who should care for them in the event that you pass before they’re legal adults.

Who Should Have an Estate Plan?

The short answer: everyone. While the possibility of not being here tomorrow isn’t something we tend to think about as much when we’re younger, estate planning shouldn’t be restricted to those in their golden years. Illness and accidents can happen to anyone, after all. That said, estate planning is also not something that should be restricted to the wealthy or those with a plethora of possessions — it’s a good thing for anyone to do. It can sound overwhelming, but this estate planning checklist should help.

A Credit Card for Nearly Every Level of Credit

Earn rewards, transfer balances, and explore cards with the best terms for you.

Privacy Policy

Your Estate Planning Checklist

You’ll want to think about the items you have that will need to be delved out among your surviving relatives and friends, or groups you’d like items donated to.

1. Decide Who Gets What (& When)

Before you start drawing up paperwork, consider making a list of these items and who you’d like them to go to. To make it easier, you can divide the list into three categories: what you want the recipient to get, who that recipient is, and when they can receive the item(s). Now that you have these items figured out, it’s time to visit your lawyer to put together the official documents.

2. Get Legal Counsel

Many of these documents aren’t legally required to be prepared by a lawyer, but using one can certainly make the process easier. Plus, they will be familiar with estate laws, as well as the rules and regulations that accompany these documents.

3. Write Your Last Will & Testament (Will)

A will allows you to make your final wishes known to family and friends. It will outline how you want your assets distributed, as well as how any debt, taxes or other expenses are to be paid upon your death. This document will detail how you want any pets cared for, as well as name guardian(s) for your children. You will also name an executor in your will — this is the person you deem “in charge” of your estate, including filing any tax forms and managing the distribution of your estate.

It’s important to note that certain monetary possessions, like insurance policies and retirement accounts, aren’t detailed in wills. You should list beneficiaries with these to note your wishes of who will receive these items. It’s important to keep these items up-to-date to help make sure your wishes are executed correctly.

Note: Wills are considered public documents; living trusts are not.

4. Write Your Living Trust

Information in your will and living trust may overlap, but you may still want both, especially if you have property you’re leaving behind.

With a trust, you transfer your assets to the trust and you specify in writing how you wish your assets to be distributed after you die. As mentioned earlier, trusts don’t become part of public record. Because of this, you can keep your financial affairs private. Also, property left in a living trust does not go through probate, which can be time-consuming and expensive. This allows your property to be distributed to your beneficiaries after your passing without any legal interference.

There are two types of trusts — revocable and irrevocable. With a revocable trust, you can amend the terms of the trust at any time. With an irrevocable trust, the trust cannot be altered once it’s been executed, so once it’s established, you won’t be able to change any of its terms. (Irrevocable trusts are more complex — you may wish to speak with an attorney if you are considering setting one up.)

5. Write Your Living Will

A living will is different from a last will and testament, so it’s important you complete both. With a living will, you specify what types of medical treatment you wish or do not wish to receive if you are ever unable to make medical decisions on your own. A living will comes into play if you are in a situation where you are still alive but can’t vocalize your wishes — like if you’re in a coma. Like with a last will and testament, you will name someone to be in charge of carrying out your wishes. In this case, that person is called a living will agent (and is different from a power of attorney).

6. Establish Your Power of Attorney

Whereas a living will details your wishes, a power of attorney is someone you decide will make decisions on your behalf. With healthcare power of attorney, you name someone that you trust to make health and medical decisions for you. Even if you have a living will, it’s still a good idea to have a power of attorney, as this will give you the opportunity to name a trusted friend or family member as the one to make medical decisions for you in any instances not covered in your living will.

There is also a financial power of attorney, which is when you name a trusted friend or family member to make financial decisions for you in case you should become incapacitated and are unable to manage your own financial affairs.

You can also grant situational power of attorney when certain conditions are met, like military service or illness that occurs while traveling, deeming someone in charge of decisions for you in these situations.

After You’ve Completed Your Estate Planning

Once you’ve prepared your estate, it’s important keep the documents in a safe place. You may even consider giving copies to a trusted friend or family member.

It’s also a good idea to revisit many of these items on an annual basis to make sure everything is still as you’d like it. You may also want to consider reviewing or revising them if there is a birth, death, marriage or other large event in your family, or if you acquire/lose property.

Lucy Lazarony also contributed to this story.

You Might Also Like

Rolled up $20 bills sit on a table.
With two stimulus checks under our belts, planning is curren... Read More

March 11, 2021

Personal Finance

A woman sits on a window seat with her young child, who is reaching up to touch her face.
The COVID-19 pandemic has taken a financial toll on nearly all of... Read More

March 1, 2021

Personal Finance

financial productivity
The following is a guest post by Orion Talmay, of Orion’s M... Read More

February 18, 2021

Personal Finance