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The ultimate estate planning guide

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Everything you need to know to plan your estate — from selecting a power of attorney to creating a living will

Estate planning isn’t exactly an uplifting task, but it becomes necessary once you have a family and any accumulated assets — from a home to an insurance policy. Contrary to popular belief, creating a will isn’t only for older people. Even if you don’t own property, you still need to plan for your children’s futures in the event that something happens to you. Ultimately, estate planning gives you peace of mind that your family won’t have to deal with financial or other decision-making stresses after your passing.
 This estate planning guide will walk you through key steps in three phases. We’ll look at which documents you need now, what should be in place when you pass on, and when you should review and update your wishes. We’ve even converted this guide into a FREE estate planning checklist to help you keep track of where you are in your estate planning journey.

Download your FREE estate planning guide checklist

Estate planning steps to take now

1. List your estate planning goals

Have an open and honest conversation with your estate planning attorney about what you hope to achieve from this process. Perhaps you’re aiming to ensure your loved ones aren’t left with any financial worries, or maybe keeping your home or business in the family is your biggest concern. Whatever your goals are, they can be achieved through careful and thorough estate planning.

2. Create a list of your assets

Even if you don’t consider yourself “wealthy,” you still have more assets than you may think, such as:

  • Property
  • Investments, like stocks and bonds
  • Retirement accounts
  • Insurance policies
  • Businesses
  • Jewelry
  • Artwork or other valuable collectibles

3. Gather necessary documents

Consider checking with your bank to rent a safe deposit box to store these important documents and remember to name a designee who can access it. That person will need to know the name of the bank, account number, box number, and key location.

  • Personal identification, such as a birth certificate, passport, and marriage license
  • Powers of attorney, also called a durable power of attorney; there are two types you can grant:
    • Financial power of attorney: This grants a person of your choosing the ability to make decisions about your money when you’re no longer able.
    • Medical power of attorney: This empowers a person of your choosing to make medical decisions for you in the event you no longer can.
  • Will: This important document gives legal direction about what you want to happen to your children and assets in the event of your death. If you do not create a will, your assets will be distributed according to the laws of your state. Upon your death, all power is transferred to an executor of your estate, which you can appoint during the estate planning process. Despite common misconception, a will does not avoid probate.  It is the document that serves as a basis for the probate process. Note: a will does not override your life insurance policy. That is a contract between you and the insurance company.
  • Trust documentation: A trust allows you to transfer property or assets to a trustee, like a friend, trusted advisor, or even yourself for the benefit of a third party, such as yourself while you are alive or your children after your death. It spells out exactly how and when you want your belongings distributed. Having a living trust can be used to avoid the probate process, which involves court review of your will and supervision of the distribution of your assets.
  • Health care documents, which include:
    • HIPAA authorization, which allows healthcare providers to share your medical status with designated family members.
    • Advanced healthcare directive, also known as a living will, which designates whether you wish to be kept on life support if there is no reasonable chance of recovery. A living will supersedes your medical power of attorney should a disagreement arise.
  • Tax documents: Consult a professional to ensure you handle all tax issues properly.
  • Debt summaries from loans and credit cards
  • Recurring bills
  • Divorce decree
  • Vehicle titles
  • A list of your digital assetsThis document indicates how you want your technical information and hardware to be handled after your passing. It includes usernames, passwords, social media pages, laptop, domain names, stored data, and online banking accounts. You can even appoint a digital executor to handle these assets per your wishes.

4. Designate your beneficiaries

Typically, the beneficiaries of your will are your spouse and children, unless you designate otherwise. Work with your estate planning attorney to understand exactly how your assets will be distributed upon your passing. For example, if you own a home, you may have a joint tenancy with full rights of survivorship in your deed, which means your spouse owns the house if you pass away — not your kids.

Estate planning documents needed after your death 

You have a couple options to alleviate financial stress on your loved ones after your death:

  • Preneed Funeral insurance: If you’d like to pay the costs for your funeral arrangements in advance, you may choose to establish a preneed plan with a funeral home. Such a plan not only allows you to either make a lump-sum payment or monthly installments, but it gives you the opportunity to spell out your wishes for your funeral service in a letter that is separate from your will. As hard as it is, consider details like where you would want to be laid to rest and what elements you want included at your memorial.
  • Final Expense insurance: This insurance helps family members pay for immediate and long-term expenses after your passing, such as estate taxes, funeral expenses, mortgage payments, and even college funds.

When to update your estate plan

Estate planning isn’t something you do once and then never think about it again. Instead, think of your will as a living document that needs regular attention and updating. Consider these tips for reviewing your plan on a consistent basis:

1. Have an estate planning attorney review your will

Even if you put together your estate planning documents by yourself to save money, it’s still important for an expert to make sure everything is properly filled out and the directives do what you intend. Consult an expert every time you make a change to your plans.

2. Go over your plan with your spouse, children, and other beneficiaries

This doesn’t mean you must show your kids your account statements, but all family members should know, in general, about your most current plans to avoid conflicts after your passing and to make sure your wishes are carried out.

3. Update your will

You never know where life will take you, so don’t forget to update your will if these circumstances occur:

  • Your financial status changes, such as a divorce, birth, remarriage, or purchase or sale of property
  • You change your mind about who should have custody of your children if something happens to you
  • You wish to add or remove a beneficiary
  • A person you named to be your power of attorney or executor of your will can no longer serve the role

4. Review your insurance coverage regularly

Check that your life insurance plan adequately meets your family’s changing needs and consider getting Short-term Care insurance to pay for health care costs in case you or your spouse have an unexpected injury or illness.

Download your FREE estate planning guide checklist

 Photo credit: iStock

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Why advance funeral planning is important

Protect tomorrow by preplanning today

Kelly Rayburn, AVP national sales and distribution at Wellabe, and Olga Villaverde, from Lifetime TV’s The Balancing Act, explain the importance of preplanning your funeral. While a difficult subject, advance planning can alleviate financial and emotional burdens for your family members.

Learn more about preneed insurance

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