Five Steps to Creating an Estate Plan

Oct. 24, 2023

An estate plan is a must-have as it accounts for your wishes for times when you’re not around to advocate for them yourself. A well-rounded plan constitutes the designation and process of who will receive your assets upon death or incapacitation.

Estate planning is an important part of a comprehensive financial plan, so why is it something that we tend to push off? It could be the emotional elements of facing our own mortality or simply it’s just that between all of life’s other priorities, it falls to the bottom of our to-do lists.

Here to inspire you to get your affairs in order is the process of creating an estate plan simplified into five steps.

Step 1: Get an updated inventory of assets

First and foremost, since the main purpose of an estate plan is to transfer your wealth and assets to the next generation, taking an updated inventory of all your assets will help ensure you have a realistic picture of what your plan should account for.

For example, when creating a trust, you can include assets such as real estate, stocks, personal property such as family heirlooms, and bank accounts. Gathering all your assets into a consolidated, updated list will ensure everything is included.

Step 2: Identify your goals, wants, and wishes

While everyone should have an estate plan, the details and motivations behind yours will vary depending on your goals and situations. Some families may want a tax management strategy, while others want to ensure their partner, kids, and grandkids are taken care of, or plan for charitable interests – and sometimes it’s a combination of reasons. Common triggers for creating or updating an estate plan are:

Tax laws have changed
With the impending sunset of the Tax Cuts and Jobs Act, many estate planning provisions will be changing. Act now when it’s more advantageous to do so.

Your goals have changed
Priorities change as we get older, therefore your plan at 50 shouldn’t be the same at 70.

Your life has changed
Life changes can have a profound impact on how you choose to structure your estate plan. You should, at a minimum, review your plan after any significant life event.

Your circle of trust has changed
The people you feel confident naming to serve in different capacities as part of your plan may change over time.

Regardless of what yours are, spend time having a candid conversation with your loved ones around what you hope to accomplish. Questions to help start the conversation include:

  1. What are your goals for your estate? You’ve spent your life building wealth and enjoying it, how do you want the next generation to inherit your legacy?
  2. Who will administer your estate and the guardianship of your children?
  3. Have you identified who your beneficiaries will be?

Step 3: Gather your team

Between you, your loved ones, and suite of professionals, executing an estate plan takes a coordinated team.

Estate Attorney
Estate planning is a complicated area of the law, so it's important to find an attorney who specializes in it. They’ll be informed and up-to-date on strategies that can help minimize the potential of tax implications and the court probate process.

Another key member of your planning team should be an accountant. He or she will understand the potential tax consequences of your estate plan. Since estate planning tools can be used for tax efficiency purposes, it’s best to include your accountant from the start.

Financial Advisor
Finally, because estate planning is about more than just a Will or Trust, your financial advisor should be a part of your estate planning team. He or she will ensure your estate plan strategically fits into your overall financial plan while confirming you’ll meet your goals.

While working with your team of professionals, don’t overlook communicating with your loved ones so they are informed of your wishes and their role in the process.

Step 4: Confirm the details (directives, beneficiaries, roles)

This step is where all the details start coming together. An estate plan includes multiple documents outlining your wishes. Yours might have a trust, a living will or medical care directive, and power of attorney.

When ironing out the details, you’ll also confirm and assign individuals to roles within your plan. Notable and common roles are:

  • A Power of Attorney (POA) is a signed document that allows an individual to make certain financial and legal decisions for you. There are three types: non-durable, durable, and springing.
  • The Executor has at least four primary responsibilities including: gather assets when you pass, administer your estate with the court, file individual and estate tax returns, and ensure your estate is distributed under the terms of your will. Responsibilities end once the estate has been settled.
  • The Trustee is the person responsible for any trust assets with duties including filing tax returns for the trust, investing assets in the trust, and distributing the assets according to your wishes. If you do not have someone in your life to fulfill this role, a corporate trustee may act on your behalf.
  • A legal guardian is responsible for the physical care, health, education, and welfare of your children until they reach the age of 18 or 21 depending on what state you live in.

Finally, when confirming the details, don’t overlook your beneficiary designations. Any asset that has a beneficiary designation must pass under that designation and not under the will. So, if beneficiaries don’t match, then your plan may not work how you want it to work.

Step 5: Create (and update) your plan

At this point, you’re ready to have your estate attorney formalize and draft your plan. Once it’s created, review your plan regularly as having an effective, up-to-date estate plan is essential to achieving your goals. Key life events (for example, grandkids are born, a significant medical event, marriage or divorce) are often good prompts to revisit your plan.

An estate plan is how you’ll be cared for, how your assets will be preserved, how your loved ones will be taken care of, and how your legacy will live on. We can’t plan the unexpected, but we can prepare for it by having a plan in place. Start planning today.

We can help

You've worked hard to build your financial security. A trust lets you cement your legacy your way, and we can help. Our Personal Trust Services encompass financial and estate planning strategies that are designed to safeguard your assets, vision, and legacy for generations to come.

Learn more

Please consult with an attorney or a tax or financial advisor regarding your specific legal, tax, estate planning, or financial situation. The information in this article is not intended as legal or tax advice.

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