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Estate Planning Basics

Estate Planning Basics

spikelegal Dec. 13, 2022

At all income levels, a proper estate plan is necessary to ensure that what you spent a lifetime building is handled exactly how you wish. Letting your wealth distribution fall at the discretion of the probate court, the state, or anyone else for that matter are all less than desirable options.

Recognizing the need for an estate plan, the next step is to determine what documents are best for your unique situation. To that end and to save time in the process, we have put together a checklist to help you consider your options and make the best decision for you.

Estate Planning Checklist

Here is a brief overview of each of the steps involved in properly preparing an estate plan. Even if you seek the help of an attorney or estate planner, understanding this process will help you be prepared with all the necessary documentation available. The steps are as follows:

  1. Collect your important financial documents, and all prior estate planning documents (if any).

  2. Make an inventory of your assets, liabilities, and income from all sources; including digital assets or information.

  3. Consider a Last Will and Testament.

  4. Decide not only on the disposition of your assets but also on the executor of the estate.

  5. Consider if a living trust, or other probate avoidance documents, might be necessary.

  6. Decide who should hold a general (financial) power of attorney.

  7. Decide who should be named in a living will/health care power of attorney.

  8. Prepare for your tax obligations.

  9. Create a reference guide for your executor (and financial planners, attorneys and accountant).

  10. Revisit and update your documents periodically.

Collect Your Important Documents

Having your important documents on hand will make this process much easier. We recommend gathering any relevant insurance policies, financial statements for any of your accounts, any ownership documents you might have, and statements on any outstanding debts. Keeping these available will make this process much quicker and less stressful.

Make An Inventory Of Your Property Including Digital Assets Or Information

Some lists break this into two separate sections, but property is property. If it has a monetary value we want it assessed. Even if it is strictly sentimental, we still want it distributed to the proper person. Items that would typically fall under this section include but are not limited to: home furnishings, vehicles, clothes, jewels, cash assets, crypto, brokerage accounts and any insurance, stocks annuities, or retirement accounts.

In the realm of digital assets it is also very important to include your social media accounts and any online access passwords that may be needed. These don't necessarily need to be included in the estate planning documents themselves, but how to access the official list may be.

Create A Last Will And Testament

Most people understand intuitively what a will is. It's simply a document that gives specific instructions for asset distribution after a person's death. It may also include care instructions or guardianship assignments for minor children left behind. The document will also designate someone to be the executor of your estate and distribute any property not controlled by some other contract (i.e. jointly owned or otherwise designated to a beneficiary).

Decide On Your Executor Of The Estate

Choosing an executor of an estate, or an estate manager is a critical decision for your estate plan. This task is so important that we recommend having a backup or two in the event the first choice is unwilling or unable to serve. Your executor should be responsible, financially stable, and generally able to execute the terms of your Will. These qualities ensure proper handling of your details.

Decide If A Living Trust Might Be Necessary

A living trust is similar to a will in many ways. It allows you to choose how assets are distributed but can also allow the beneficiaries to avoid probate court. A trust will most certainly involve more upkeep than a will, so it is not the solution for everyone. It should go without saying that decisions like this are best made with legal guidance.

Decide Who Holds A Financial Power Of Attorney

There are situations where you may need someone to speak on your behalf for financial reasons before your passing, in which case a Power Of Attorney may be necessary. There are a few different ways in which these powers can be granted.  A General Durable Power Of Attorney is most often the preferred choice, as it is effective immediately and extends beyond a subsequent incapacitation.  However, there are other types of powers of attorney that are best discussed with an attorney.

Write A Living Will and Health Care Power of Attorney

Living Wills and Health Care Powers of Attorney, also known as advance directives, control decisions regarding your end-of-life care. These exist to make known your desires on what measures are appropriate to take in prolonging your life, when you are unable to speak for yourself. Living wills insure notice to your family members prior to the implementation of your end of life decisions; and can be used in tandem with a healthcare power of attorney to ensure that your health care objectives are respected.

Prepare For Your Tax Obligations

There are a few different tax concerns at both the state and federal levels that you will want to keep in mind when setting up your estate plan. The IRS changes estate tax laws frequently, so make sure you're prepared by talking to a tax professional as well.  Don't take for granted that rules and thresholds are the same from state to state and federally.

Create A Reference Guide For Your Executors

It's one thing to create a legal document telling the government who has the right to make decisions on your behalf; it's another matter entirely to set that individual up for success in executing your wishes. In an effort to lessen the stress on the person/people speaking on your behalf, you should create a guide including or directing them to everything they will need. The guide should include how to find and access all of the following (at least): financial accounts, insurance policies, credit cards, vehicle loans, and mortgages.

Other information that would ideally be in the guide would include: who and how to contact close friends about your death, locations of any physical safe storage locations, and specific end of life requests ie. burial, cremation, etc.

Revisit And Update Your Documents Periodically

The final and most important step is to revisit and periodically update the information in your estate plan. Once a year is a nice interval to assess how things like births, marriages, divorces, adoptions, and deaths might affect your previous plan. While doing this assessment you will want to make sure you have on hand updates of any pertinent accounts or documents.

Make a plan now to preserve your legacy! Call us at 440-517-7165 to schedule an initial consultation or email Neil at!