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Six Estate Planning Steps to Take Now

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Updated April 14, 2022

Duke Cunningham CFP®, Vice President Business Development

Important considerations to provide peace of mind for yourself and your loved ones

A financial plan is incomplete if it is missing an estate plan. No one likes to think about death, and it may feel overwhelming to start planning for what happens to your property and financial responsibilities after you pass, but detailing your wishes for your assets saves your family members and the legal system from making those decisions for you. And it might be an easier process than you think.

What exactly is an estate plan?

An estate plan is, simply, your directions for how you want to pass down your property in the event of your death. Most commonly, an estate plan includes your will, but there are other options available to you. Having an estate plan is the only legal way to protect your final wishes; everyone should have one, regardless of age or estate size.

Deciding how to pass down your possessions might feel like an enormous task, but it’s essential. If a person dies without an estate plan, assets can get caught up in probate court, causing additional financial and emotional burden to your family.

Steps to Create Your Estate Plan

Creating your estate plan is a process that can be broken down into easy, digestible steps—most of which you can accomplish on your own, without legal assistance. Estate planning is also fluid; you can always reassess and alter your plan to reflect your life changes. Here are some key steps to take when you begin to make your estate plan:

1. Make a list of your assets

The first thing you’ll need to do is make a list of your tangible and intangible assets. Your house and other real estate, land, vehicles, family heirlooms, collectibles, cash, mutual funds, IRAs, investments of any kind, copyrights, patents, domain names, or franchises etc. should all be included. Be as thorough as you can with this, but remember you can always go back and add to this if you purchase or inherit something of value.

2. Estimate your worth & consider your debts

Look at your list and estimate the value of your worth. It’s possible that this will require external help, depending on your situation. If your house, valuable heirlooms, or collectibles have recently been appraised, you have a decent idea about what your assets are worth. Subtract any financial responsibilities or debts from the value of your assets. Any major debt (example: mortgage) will require a plan so that responsibility doesn’t fall to your family.

3. Make a plan for your dependents

Review your life insurance policy if you have a spouse and/or children who will need financial support, and make sure that you have a policy that will be sufficient to cover the cost of living and lifestyle. If you have children, designate a guardian and outline your wishes for their care in the event that both parents die at the same time, such as in a car accident or similar.

4. Align your beneficiaries

Next, designate beneficiaries for your assets. Spouses are most commonly listed as beneficiaries and are the default in court when a death occurs without an estate plan. It’s important to check your insurance, retirement or investment accounts to ensure the listed beneficiary is the one you actually want to receive those annuities. Beneficiaries listed on these accounts will supersede any beneficiary you designate in your estate plan, and any inconsistencies will potentially extend the time your family and assets spend going through probate.

5. Decide on your legal directives

Once you’ve done the previous steps, make your wishes official by drafting a will. A will is a legal document that outlines your intentions for transferring your assets after death. Wills are fairly easy to write and can be done with or without the help of an attorney. There are several online tools available if you have a straightforward estate plan, but more complicated or larger estates require the help of an attorney. It is important to note that even with a will, your assets will still go through probate court. Doing the legwork on the previous steps is crucial to reduce the time and money spent in the legal system. If there is no will at all, assets, debts, and guardianship will also go through probate, but the court will make these important decisions for you.

6. Consider a living trust

Wills are often the go-to when thinking about legal documents involved in estate planning, but they have limitations that can be avoided with a trust. Asset transfer through a trust can go into effect upon creation and will avoid probate court and certain gift taxes. Depending on your situation, adding or substituting a trust as part of your estate plan is a responsible option.

We’re here to help

You can’t control death, but you can control your legacy. Trust Point can help make your estate plan one that brings you comfort knowing your family, friends, or charities will be taken care of after your death. Contact us for expert advice and guidance.

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Duke Cunningham CFP®, Vice President Business Development