While death may not be your favorite topic to think about, what happens to your estate after you die is a reality you need to consider. Estate planning is the process of designating who can make decisions on your behalf, who receives your assets, who cares for your dependents, and who manages any other decisions regarding finances, assets, medical care, and other matters when you die.
Effectively organizing your affairs is a gift to your loved ones and offers you peace of mind, knowing everything will be handled according to your wishes.
The good news is that it doesn’t have to be complicated or time-consuming. Thanks to online resources like our estate planning checklist, you can make your estate planning journey as smooth as possible. Keep reading to learn more about how to start the estate planning process.
1. Know Your Estate Planning Documents
Much of the estate planning process involves creating and maintaining specific documents. The most common estate planning documents include:
- Will: A will is a legal document that details how you want your assets distributed to beneficiaries after your death. You can also name an executor, guardians for minor dependents or pets, and any specific funeral wishes, like if you want to be cremated or buried.
- Trust: A trust is a legal arrangement that allows you to place property, including money, real estate, or any other valuable asset, into the care of another person, which will be distributed to your beneficiaries at some point after you die. There are two types of trusts:
- Revocable trusts allow you full control over your assets while you’re still alive, meaning you can change or terminate the trust anytime.
- Irrevocable trusts are not as flexible and do not allow you to alter or terminate the trust unless you obtain a court order and unanimous consent from the trust’s beneficiaries.
- Power of attorney: A power of attorney (POA) is the legal authority you give to someone else to make financial, medical, or legal decisions on your behalf should you become unable to do so.
- Advance health care directive: An advance directive, also called a living will, allows you to outline how decisions should be made regarding your medical care — including medication, treatment options, end-of-life care, etc. — if you’re unable to make those decisions yourself.
- Insurance policies: You’ll want to gather copies of any insurance policies you have, including life, health, home, and car insurance.
- Financial statements: Like your insurance policies, gather information about all your financial accounts, including your bank, savings accounts, retirement accounts, credit card accounts, loans, investment portfolios, and tax returns.
- Proof of identity: These documents include your Social Security card, birth certificate, marriage certificate, military discharge papers, and any other documents that can be used to prove your identity. Keep these documents in one place to make it easier for your executor to move through the necessary legal processes.
2. Take Inventory Of Your Physical Assets
You’ve likely accumulated tangible assets throughout your life — now is the time to take stock so you can decide what you want to leave to whom. An estate planning checklist can help you identify and list all valuable assets, including:
- Real estate
Take notes on each item’s history and value and who you want to leave it to, if applicable. You can certainly keep a written list with this information, but a digital spreadsheet may be easiest to update and share with your estate team in real-time.
3. Organize Your Financial Assets
Just like your physical assets, you’ll need to keep an organized list of your financial assets, including:
- Existing insurance policies
- Retirement accounts
- Bank accounts
- Bonds or annuities
- Any other intangible assets
Don’t forget to include your debts as well, like mortgage details and credit cards. Collect and store policy documents and statements in a safe place, and be sure to include information, like:
- Account numbers
- Account contacts
- Asset location
- Access instructions
Keeping this information organized in a central location makes it easier for whoever is in charge of managing your financial affairs after your death.
4. Track Your Memberships And Affiliations
Maintaining an updated list of organizations you’re a member of or otherwise associated with is also a good idea. This may include organizations like AARP or Lions Club or charities you support, like local arts collectives or shelters.
This list lets your loved ones know who to contact about your death to cancel memberships and automatic payments. It also identifies groups that were meaningful to you that your loved ones may wish to support in your honor.
You might even consider making a list of acquaintances, distant friends and relatives, and former colleagues who might want to be notified of your death so you don’t leave your family wondering what to do when you die.
5. Update Your Beneficiaries
After you’ve identified all of your existing policies, review your accounts and ensure everything has your current contact details and beneficiary information — especially for life insurance policies and bank and retirement accounts. You might also want to share contact details with your beneficiaries so they’re aware of the existing accounts.
If you haven’t yet designated a beneficiary for one or more of your accounts, now is the time to do so. Be sure that the beneficiaries listed on your accounts match those listed in your will.
Also, consider choosing backup beneficiaries in case your primary choice is unavailable for any reason.
6. Name Your Estate Executor
Naming an executor — the person who will be responsible for administering your estate after you die — is one of the first and most important steps in creating a will. They will also be responsible for paying any remaining debts, filing your taxes, and notifying beneficiaries and others about your death.
It’s common to appoint an estate planning attorney, but you can also choose an accountant or a family member. In any case, make sure it’s someone you trust to act impartially. Just like beneficiaries, you might also consider naming a backup executor in the event that your primary choice can’t carry out their duties.
7. Create Your Will
Your will is the legal document that identifies how to distribute your assets and to which beneficiaries. It also covers:
- Guardianship of any living minor children
- Next ownership of surviving pets
- Preferred funeral arrangements
- Any other specific wishes
Creating a will ensures your loved ones are taken care of after your death. If you don’t have a will in place before you die, state law will determine what happens with your estate.
You can write your own will, use software templates or online services, or hire an estate attorney to assist you. For complex situations, it may be best to hire a professional who can ensure everything is accurate.
8. Consider A Living Trust And Power Of Attorney
A living trust is a trust that becomes effective during your lifetime (versus a testamentary trust, which only takes effect after your death). Trusts are especially helpful when beneficiaries are minors who aren’t yet old enough to manage their entire inheritance. They also allow your assets to be distributed more quickly by bypassing the probate process.
A power of attorney names someone responsible for your financial and medical choices if you can’t make the decisions yourself. You can name one person as your POA, or you might name different people for different purposes, like a separate medical POA (often included in an advance health care directive) and financial POA.
You can also name backup POAs in case your first choice is unavailable. If you haven’t named a POA to act on your behalf and you become unable to manage your own affairs, a state court may appoint one for you.
Work with your estate planning attorney to set up any trusts and appoint POAs.
9. Make Copies And Distribute Your Estate Documents
Once everything is signed and notarized, create copies of your will or trust and share them with relevant parties, including your executor and estate attorney. Store your copies somewhere safe and secure, like a physical safe or at a probate court.
You might also want to create digital copies in case your physical copies get misplaced, stolen, or destroyed.
10. Review And Maintain Your Estate Files
Even once you’ve successfully organized your affairs, you’ll still have to maintain your estate planning documents. Revisit your estate plan every few years, making any updates as necessary.
You’ll also want to revisit your documents after major life events such as divorce, marriage, or the birth of new potential beneficiaries like grandchildren. Update your documents accordingly if you experience any changes to your assets or liabilities or if your medical care preferences or other wishes have changed. Make sure to communicate any changes to your executor and attorney.
What Happens If You Don’t Have An Estate Plan?
Your estate plan gives you control over the distribution of your assets after your death. If you die without one (called “intestate”), your estate will go through probate court to determine how your assets are distributed, which may not be according to your preferences. The probate process can also be long, expensive, and even intrusive, making the experience stressful for your loved ones.
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