To start an estate plan, simply follow these seven steps. Each one should be taken with the assistance of a knowledgeable and experienced estate planning attorney, to ensure the validity and proper execution of each document:
Identify Your Estate Planning Goals
Identifying your estate planning goals is the first step in the estate planning process. Your aim should be to identify the primary objectives that will dictate the development and implementation of your comprehensive estate plan. Some of the most common estate planning goals are:
- Probate avoidance;
- The smooth transfer of wealth from one generation to the next;
- Incapacity planning;
- Providing for minor children and special needs loved ones;
- Business succession planning; and
- Tax saving.
Inventory Your Assets
Your estate plan should start with a thorough inventory of all of your assets including:
- Real estate;
- Bank accounts;
- Stocks, bonds, and other securities;
- Personal property, like cars, jewelry, etc.; and
- Life insurance policies, retirement accounts, and annuities.
Create a Will or Trust
Both will allow you to spell out how you want your property distributed after you pass away, and to appoint someone to administer the distribution of your estate. A Will also allows you to appoint a guardian for your minor children, but must be probated. With a Trust, your assets can bypass probate and your affairs can stay private.
Fill Out Beneficiary Designation Forms
Decide who you want to receive the proceeds from your bank accounts, retirement funds, and life insurance policies. The beneficiary designation forms on these accounts supersede your Will. So, it is very important that they are filled out correctly and kept up-to-date.
Create Powers of Attorney
Choose someone to act on your behalf when you are unable to act due to injury or illness. You can give a General Durable Power of Attorney to one party to act as your agent for your financial affairs, and a Durable Power of Attorney for Health Care to another party to make medical decisions on your behalf, or you can authorize the same person to do both.
Create a Living Will
This document expresses your preferences for the types of medical treatment you want or don't want to receive during emergencies and end-of-life circumstances, including life support, cardiopulmonary resuscitation, comfort care, etc. A Living Will plus a Durable Power of Attorney for Health Care creates what is called an Advance Health Care Directive, which is very helpful for avoiding family conflicts and confusion.
Review & Update Your Estate Planning Documents
Change is a constant in life. So, you can't just set your estate plan and forget it. Make sure to review and update your estate planning documents frequently, at least every couple of years, and after every major life event, such as a death or birth in your family, marriage or divorce, or any significant change in the make-up of your estate.
In addition to the essential estate planning documents mentioned above, you may also want to discuss your need for the following documents with your estate planning attorney:
- A HIPAA Release
- A DNR (Do Not Resuscitate Order)
- Testamentary Trust Provisions (to be included in your Will)
- Emergency Guardians for Minors Authorization
- Organ Donation Authorization
- Transfer on Death Deeds
- A Buy-Sell Agreement (for business succession planning)
An experienced estate planning attorney can help you get all the essential estate planning documents in place, and ensure that your estate plan will work when and where you need it to work.