Estate Planning Checklist

An estate plan outlines how you’d like your assets to be distributed upon your passing. It helps ensure that your wishes are upheld, your legacy is cemented, and your loved ones are cared for. It can also spare your family from unnecessary confusion, conflict, and tax burdens. For these reasons and more, estate planning is a pillar of any comprehensive financial plan regardless of your wealth or the number of assets you own.

As you get your estate in order, here’s a checklist of eight tasks you’ll want to consider:

  1. Inventory Your Assets

The first step in creating an estate plan is to understand what your estate actually entails. To do this, make a list of all your assets – including things like bank accounts, investment securities, property, digital assets, and sentimental items – and start thinking about who you’ll want these different assets to pass to.

In addition to the things you own, you’ll also need to outline the things you owe. Create a liabilities list that covers any mortgages, credit lines, or debt that you haven’t fully paid off yet.

  1. Draft a Power of Attorney POA

Next, you’ll want to draft a POA document that legally designates someone to make financial and medical decisions for you should you become incapacitated or otherwise unable to make decisions yourself. This person will be able to act on your behalf to:

  • Manage your assets.
  • Pay bills and taxes.
  • Make healthcare decisions.

Due to the magnitude of these responsibilities, the person you appoint should be someone trustworthy, such as a spouse or an adult child.

  1. Create a Last Will and Testament

If you haven’t already, think about creating a Last Will and Testament that documents your end-of-life wishes. This includes directions for everything from funeral arrangements and settlements for outstanding debts to decisions regarding which possessions go to whom. Without a will, your loved ones might have to navigate the emotional, time-consuming, and costly probate process.

  1. Use a Revocable or Irrevocable Trust

Similar to a will, a trust provides a way to automatically distribute assets upon the owner’s death. In a revocable trust, you can change the terms during your lifetime, but the assets remain part of your taxable estate. An irrevocable trust, on the other hand, requires a beneficiary or judge to make changes. However, it removes ownership and can be a way of managing tax liability. Consult with a tax professional to determine which type of trust better suits your needs.

  1. Establish a Letter of Instruction

Another way to make sure your final wishes are carried out is through a letter of instruction. This document provides personal information and directions that aren’t contained in your will, such as online account passwords or specifics about your funeral or obituary.

Of course, it’s always important to verbally communicate your desires with your loved ones early and often, but a letter of instruction can make things crystal clear and easy to follow.

  1. Review Accounts and Beneficiaries

Even after you’ve finished piecing together an estate plan, it’s important to review your beneficiary designations regularly and make adjustments as they become necessary. You should also check that your designations are consistent across your estate planning documents. For example, a will might appoint your retirement account to one person while the actual account might have another name listed. These kinds of discrepancies can lead to conflict and potentially probate for your heirs.

  1. Understand Taxes and State Regulations

A key aspect of estate planning is finding ways to handle estate and inheritance taxes to manage the burden you impose on your heirs. For 2023, the federal estate tax rates range from 18% to 40% for assets over $12.92 million. However, some states also levy taxes on estates under the federal exemption threshold. When planning for your estate, take the time to research and understand your state’s regulations and your specific tax obligations. Working with a tax professional can help you organize your assets in a tax-efficient manner.

  1. Consider a Financial Advisor

While this checklist provides a list of many estate planning tasks, it’s far from comprehensive. A financial advisor can help you better understand your current position, plot a path toward success, navigate through the process to help preserve your assets, and secure your legacy after you’re gone.

If you’re looking for professional advice to help plan your estate, reach out to a financial advisor today.

This material is intended for informational/educational purposes only and should not be construed as tax, legal or investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Certain sections of this material may contain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results. Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption of any kind. Please consult with your financial professional and/or a legal or tax professional regarding your specific situation and before making any investing decisions.

Share this Article