Estate planning is not something most of us think about. When you think of estate planning, you usually conjure up images of the rich and famous. It is believed that only the wealthy need an estate plan. And that is a completely wrong assumption.
Trust & Will protects your family’s future by guiding you through the creation and distribution of your estate plan
If you happen to have a checking account, savings account, retirement account, investments of any kind, property, life insurance, or personal possessions, you need an estate plan.
Creating an estate plan can be more detailed and time-consuming, or it can be simple and fairly painless. Personally, I prefer estate planning for dummies. This is probably the best option for most of us who don’t have a lot of complicated investments in different places.
Either way, I wanted to create an ultimate estate planning checklist for you to make the process as simple and painless as possible.
What is estate planning?
Estate planning involves creating a plan of action for your family after your death. Whether you want to think about it or not, it will happen to all of us at some point. So it is important to plan ahead and make the transition as easy as possible for those you leave behind.
The first things you need to plan are:
- Guardianship of underage children.
- Life insurance payouts.
- What happens to your main residence?
- How are your retirement accounts liquidated or split?
- What is the money in your current / savings account intended for?
- Will your car be sold or given to a family member?
- What happens to investment properties?
- Name an executor.
- How are your personal possessions shared?
However, these are not the only items to include in your estate plan. There are some other, lesser-considered things that should be included as well.
These items are things like:
- Instructions for your care if you become disabled before your death.
- Who will your POA (Power of Attorney) be?
- Caring for disabled family members or family members who may not be able to support themselves financially.
- What happens to your business if you own one?
Once you have determined which of these elements apply to you and your situation, it is time to create your estate plan.
Estate planning checklist
We may not all find ourselves in the same situation or have the same items on our checklist. However, there are a few points that we should all include on our estate plan no matter what.
These points are extremely important in order for each of us to be as specific as possible to avoid interference by the state or the probate court.
Will or trust
Having a will and estate planning checklist is a very important step. Having one of these can save your loved ones a lot of time, potential fights, and money. Both ensure that your property is distributed to loved ones as desired without argument.
Although a will and a trust are very similar animals, they are not exactly the same. In a will, the most important points that you should design are:
- Name your executor or personal representative.
- Appoint a guardian for your children.
- Specify the beneficiaries to receive a specific property.
- Name alternative beneficiaries if the main beneficiaries are no longer an option.
- Specify someone to take over any remaining objects, if any.
- Indicate how you want all personal assets to be divided.
- Provide instructions for assigning all business assets, if any.
- Layout how all debts, taxes, and expenses are to be paid.
- Specify how all properties should be treated.
- Determine who will be the new caretaker for your pets.
While a living trust is similar, it can help cut some taxes and legal fees. This is because a trust lives on without you after you die. While you are still alive, you are the trustee who manages the living trust so that you are in full control of what happens. Living Trust has all of your assets under the umbrella of Living Trust that you control.
After your death, however, you hand over control of the Living Trust to your successor Trustee, whom you previously named when creating the Living Trust. While you can determine how things should be handled, it is up to the successor trustee to address those requests.
One of the least painless and inexpensive ways to do this is by using Trust & Will.
Trust & Will This option allows you to enter all of your personal information into the system and create a Guardian, Will or Trust document for you. You do all of this without a lawyer and in accordance with the laws of your respective state.
So, if you’re not ready, or just don’t have the time to meet with an attorney to complete these important documents, Trust & Will may be the answer you are looking for.
What is the difference between a will and a trust?
There are two main differences between a will and a living trust. With a will, you can designate guardians for your children, but that’s not an option with living trust.
Living trust will keep your family out of probate proceedings and potentially save them big bucks on legal fees and taxes, but that is not the case with a will. If you have underage children, you likely need both a will and living confidence to cover all of your bases.
Please also note that trusts only cover property and assets brought into the trust, while a will covers everything that belongs to the person making it. A will is also a public record, but trusts are generally not.
Letter of intent
A letter of intent is exactly what it appears to be. This is a letter that you draft for all of your accounts with your stated intentions. You can also use this letter to specify how your funeral will be carried out.
While these letters may not always be considered legal and binding in the eyes of the law, they can be extremely helpful. If you have only one will and no living trust, your family will be inherited and this type of letter can aid a judge in making a decision based on your desires.
This doesn’t always work, but it helps. Why shouldn’t you do it? Especially when it helps your family through this difficult time after your death.
Designating a beneficiary for all of your financial accounts can help alleviate some of the inconvenience when it comes to where certain assets should go.
For example, you should designate a primary beneficiary and a conditional beneficiary in your life insurance policies. With life insurance, you can designate two people. If the primary beneficiary is unable or is no longer alive at the time of your death, a conditional beneficiary comes next.
If you haven’t set up a conditional beneficiary and the primary recipient can’t manage the account, your family is at the mercy of the courts to decide who should get what. And nobody wants that!
The same goes for retirement accounts, investment accounts, real estate transactions, etc.
The same person does not have to be the beneficiary of each type of account, nor do you need to have the same Conditional Beneficiary.
Choosing a specific guardian for your underage children is one of the most important decisions you will ever make. If you don’t have a guardian on your will, the courts can decide where they think the children are best off. Sometimes that could be with a different family member than you otherwise would have chosen, or it could even be with a ward of the state.
Whoever you choose to be your children’s guardian must be:
- Ready to take care of your children.
- Be financially sound.
- Shares your views on raising children.
- Will do what they can to keep your memories alive for your children.
Being chosen to be the guardian of your children is a very intoxicating term. But it’s also one of the most selfless and loving things you could ever do for someone you love.
Power of Attorney for Healthcare
A Health Care Authority (HPOA) is an extremely important designation that you must have while you are alive. That person will have it Authority to make all decisions related to healthcare there should come a time for you when you are no longer able to do so.
That is why you want to choose someone who knows you and your desires very well. That doesn’t mean they have to think the same way you do, but they have to be willing to act as the mouthpiece to carry out your health desires the way you want them to.
This is another case where a backup or secondary option is imperative. If you don’t have a secondary healthcare mandate, you may not get the treatment you want.
Do I need to create a medical policy?
Yeah, you sure do. Your medical policy will list your healthcare authority, if you choose to do so. Otherwise, only who you select as power of attorney is listed. You must also provide as much detail as possible about what your medical care will be. Some of the points to consider are things like:
- Do you want a DNR (not revive)?
- What do you think of being in a comatose state?
- How would you like to deal with diseases that affect your mental performance (such as Alzheimer’s and dementia)?
- What do you think of medications and experimental treatments?
The list can be carried over to anything in healthcare that is important to you. No matter what, if you don’t have a medical policy, you probably won’t get the medical treatment you want.
Permanent power of attorney
Permanent Power of Attorney (POA) is the person you designate to handle all of your affairs after your death. This person takes care of things like:
- Real estate transactions.
- Withdrawals or liquidations of financial accounts.
- Resolution of business transactions.
- Other legal matters.
However, that person also has the authority to handle the same items while you are still alive if you reach a point of incapacity. It is extremely beneficial to have a permanent POA while still in charge of all of your faculties.
If you don’t have a specific one and become incapacitated, the courts can determine whoever your POA should be. And that may not be someone you want to care for your wealth and important decisions.
In most cases, the spouses choose each other as POA. This is typically referred to as a mutual authorization. However, if you don’t have a spouse, or feel that there is someone better suited to your wealth and finances, you’ll want to designate that spouse instead.
When should I change my estate plan?
On average, you should take a look at your estate plan every five years to make sure everything is still as you want it. However, when certain life events occur, this is what you should do Review your estate plan beforehand to make the necessary changes.
Some of these life events include:
- Birth or adoption of a child.
- Death of a family member.
- Tax changes.
- Change of residence to another state or country.
- Change in wealth.
- Guardian, trustee or executor change.
What if my family tries to challenge my will?
If your will or trust is properly documented, your family will not be able to contest it as it is a legal document. However, if you have competing names for different beneficiaries for the same asset, this can be a problem.
For example, if you have a beneficiary listed as a primary in your life insurance but as a secondary in your will, this is a problem. You want to run a fine brush of all of your accounts and your will or trust to make sure everything is in line and there is no cause for confusion or argument.
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Overall, if you have not already done so, it is extremely important to start your estate planning now. Having a proper estate plan ensures the future financial health of your wealth and your beneficiaries. You will also make life a lot easier for your remaining family after your death.
Ultimately, using this estate planning document checklist is a great way to dip your toe in the water. However, when you’re ready to take the plunge, Trust & Will can help you get started if you want a simpler method and don’t have too many complicated accounts. If you have a lot more assets in different locations or a more complicated family structure, consulting a lawyer who specializes in estate planning may be the way to go.
In any case, now is the time to get this done. So take the plunge. Your future family will thank you for making their lives a little easier.