Estate planning is often back-burnered by people, especially those who are young or busy or just don’t want to deal with it. Older people may already have an estate plan in place, but most dislike the idea of reviewing or updating it. It’s not hard to understand why—it’s overwhelming to think about what you have, how much of it you have, who to give it to, how to distribute it, and everything else.

But it simply cannot be ignored. It must be a priority.

  1. Have estate planning documents in place. The first step is to simply create an estate plan. Get your estate planning documents prepared by an estate planning attorney. An estate plan helps to dictate your wishes when you pass away or in the event you should become incapacitated, both of which can happen unexpectedly. At a minimum, you  should prepare the following estate planning documents:Last Will & Testament—outlines your final wishes and how you would like your estate to be distributedPower of Attorney—authorizes a trusted individual to act on your behalf while you are aliveTrust(s)—a separate entity that holds property for the benefit of either the grantor (creator) of the trust or his or her heirs, and can address control issues and/or save taxesHealth Care Directive—designates a person to make decisions on your behalf and dictates how you should be cared for in the event that they are incapacitated

    Living Will—designates a health care advocate whom is in charge of making important medical choices on your  behalf according to your wishes

    Each of these documents will allow your loved ones to know your wishes, make necessary decisions, potentially save taxes, administer the estate, pay final bills, and distribute assets per your wishes, among other things. Ultimately, it’s really the only way to ensure your wishes are honored even after you are gone.

  2. Make a list of financial accounts and assets. Should you pass away or become incapacitated, a list of your financial accounts and assets is essential to ensuring that the estate is properly handled. It also makes it easier for your  loved ones and agents to review what their relative owns and address each account and asset efficiently.You should list all bank, brokerage, retirement and other financial accounts, as well as all property, valuables, safety deposit boxes, insurance policies and annuities. Moreover, as part of this accounting, you should include copies of all deeds, tax documents, estate planning documents, and a list of all other items.All this information and these documents should be stored in a safe place and you should advise your agent(s) and/or trusted loved ones where they can find everything.
  3. Confirm beneficiary designations. Your retirement accounts, life insurance policies, and any joint or payable-on-death titled assets will not pass to heirs by way of your Will. For this reason, you should review the following to ensure consistency with your wishes:Beneficiaries of all retirement accounts (IRAs, Roth IRAs, Employer Sponsored Plans, Pensions)Beneficiaries of all insurance policies (life insurance and annuities)“Transfer on death” or “payable on death” designations for your bank or brokerage accounts
  4. Review wishes with the proper fiduciaries. Having everything on paper is important. After all, that’s what really makes it legally binding. However, should you pass away or become incapacitated, your attorney(s), executor(s), or trustee(s) will be acting on your behalf. So, it’s imperative and beneficial for you to discuss this responsibility and your wishes with these people. Seeing it on paper is not the same as hearing it from the horse’s mouth!
  5. Make sure all assets are properly titled. Many people don’t realize this, so it’s important you understand the difference among titles. In general, should you pass away, any jointly owned property (real estate, bank accounts, brokerage accounts) will become the property of the surviving joint owner. This type of ownership is called “Joint With Rights of Survivorship.”If you intend for your share of ownership to go to heirs by way of your Will, you need to make sure that jointly owned assets are owned as “Joint Tenants in Common.” And, of course, there are often estate tax benefits when assets pass vis à vis the Will versus joint titling.
  6. Consider incapacity—have a durable power of attorney. When thinking of estate planning, most people automatically think of passing away. However, you should be just as prepared for the possibility of being incapacitated. In the case of incapacitation, you will need to make sure your Power of Attorney is durable, which allows them to designate someone to make decisions for them as it relates to medical care and finances. To this end, you should also consider a Health Care Directive or Living Will.
  7. Consider the needs and situation of heirs. When contemplating your heirs, you shouldn’t just name them as beneficiaries without considering their needs and situations. For example, you may not want to leave a fifteen-year-old niece a $150,000 inheritance outright. You may wish to place the money in a Trust so that they can ensure the niece uses it for important things such as a college education or a down payment on a home later in life.
  8. Remove assets from the estate for potential tax savings. We already know that tax laws can really complicate things, especially when it comes to inheritances. So, gifts and inheritances should be given in the most tax-efficient way possible. For example, remember that life insurance policies should be transferred to an Irrevocable Life Insurance Trust. You should meet with your accountant or tax professional to ensure the proper transfer of gifts and inheritances, and get guidance on the best ways to save on taxes.
  9. Consider gifting techniques. You should consider different gifting techniques—while you are still alive. There are limits you can give each year to anyone without using your lifetime exemption. Also, if you are looking to you’re your grandchildren’s college education, you can accelerate up to five years of gifts into a 529 Plan to remove funds from your estate, earmark them for college, realize tax-free growth, and not give up control of the assets.
  10. Review and update the estate plan periodically. An estate plan is not a “set it and forget it” kind of thing, particularly since Congress is constantly tinkering with the estate tax laws these days. Once you have created an estate plan, you should revisit it periodically—no less than every three to five years, and possibly more often. Life circumstances have a way of changing on us, and perhaps even more importantly, so do Federal and State estate tax laws.


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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