Estate Planning in Six Steps

Use these six estate planning steps to prepare plans for your assets and your family members, too.
Tackle this Essential Process with an Easy-to-Follow Guide

Although it can be an emotionally taxing scenario to consider, none of us will live forever. When you’ve undertaken a lifetime of hard work, it’s likely you have accumulated some wealth, assets, and special family treasures, too. So, it’s critical to consider what will happen to these things when you die or become incapacitated. Having an estate plan in place allows you to legally specify your wishes and ensure they will be carried out, and it can also help to head off potential family disputes and keep details about your financial affairs private. If you don’t have an estate plan in place yet, read on for the six critical estate planning steps you should take to secure your future wishes now.

Estate Planning Step 1: Make a List of Your Assets and Debts

The estate planning steps we’ll share here start with a basic inventory. Make a list of every asset you own. This should include account numbers and contact information for financial institutions, as well as names and numbers of your trusted advisors. Next, do the same with any debts you owe. All of this summary information on what you own and what you owe should be kept in a secure location, along with copies of any important documents related to them. You should also provide a copy to the executor of your will. This summary could be on paper, though it is best kept in a digital file.

Estate Planning Step 2: Plan for any Contingency

You may be lucky enough to enjoy health and longevity and live to a ripe old age, but you need to consider what would happen to all of your assets – including any property – if you were to pass away today without completing these estate planning steps. You should also consider a plan for what happens if you become incapacitated so that your family can carry on your affairs without a visit to probate court – a process that can be both lengthy and costly. Keep in mind that you may also need to document a strategy for providing income if you become disabled, or for paying medical expenses for care you may need.

SEE ALSO: Three Questions to Help You Develop Your Estate Plan

Estate Planning Step 3: Provide for Your Loved Ones

For many people, the primary goal of taking these estate planning steps is to provide for their loved ones, especially children and grandchildren. Your estate plan can include such provisions, including plans for guardianship of your children if you and your spouse pass away before they reach age 18. Note that if you wish to provide financial security for loved ones with special needs, you’ll have to work with your financial advisor to carefully avoid jeopardizing their existing eligibility for government benefits. You might look into a special needs trust as one option to serve your needs.

Estate Planning Step 4: Protect Yourself

One of the key components of a good estate plan is that it protects your assets for your heirs, while also minimizing taxes and expenses. This might mean special planning for transferring or disposing of unique assets like a family business, investment properties, or stock. It’s common to utilize tools such as permanent life insurance and trusts to protect assets and ensure your future financial goals can be met.

Estate Planning Step 5: Get the Details Down

If you’ve taken these estate planning steps but failed to get the details of your wishes down in writing, your work may have been in vain. It’s only through legal documentation that you can ensure all the specifics of your wishes will be met. Don’t neglect to include items like designated beneficiaries for life insurance policies and retirement accounts, and to ensure that titles of material assets are named properly (think vehicles and property). You’ll want to keep an updated will to distribute your assets, a living will that reflects your wishes for end-of-life, and designated powers of attorney for both financial matters and healthcare decisions.

SEE ALSO: Should Life Insurance Be Part of Your Retirement Plan?

Estate Planning Step 6: Designate Fiduciaries

Even a perfectly crafted estate plan will be flawed if you neglect to choose fiduciaries who will execute your plans. Fiduciaries are often family members or trusted friends, though they may also be hired professionals like attorneys or bankers. You should appoint an executor of your will, a trustee for your assets, a legal guardian for dependents, and a power of attorney. Not only do you need to choose these individuals, but you also need to ensure each is aware of your wishes and that they agree to act in a fiduciary capacity for you. If they do, they should be made aware of where any pertinent estate planning documents are kept.

Have You Completed These Estate Planning Steps?

Having an estate plan in place is important for adults of any age. Whether you’re in the initial stages of growing your wealth or you’ve accumulated a great deal over your lifetime, creating an estate plan – and keeping it up to date – is essential in helping you preserve and manage your assets for your loved ones. If you’d like professional assistance, a financial advisor can be an excellent resource.

At Andersen Wealth Management, helping you meet your financial needs – now and into the future – is our first priority. Contact us today to begin a conversation about building your ideal estate plan and gaining greater peace of mind. We look forward to hearing from you!