What should be on an estate planning checklist?

Creating an estate plan can help put affairs in order and allows an individual to clearly outline how they want their assets to be distributed after they pass away or if they’re incapacitated and unable to make decisions on their own. A thorough plan includes instructions for health care, final arrangements, distribution of property and assets, and guardianship of children. To help get an estate plan started, we’ll explore several of the benefits and seven items that should be on an estate planning checklist.

Benefits of estate planning

An estate plan is important for any individual, no matter their income level or net worth. Outlining final wishes and how assets should be distributed helps lower the stress on loved ones and can allow you to take care of them even after you’re gone.

Estate planning allows you to:

• Lessen the financial burden on beneficiaries
• Outline financial wishes for family
• Take care of your loved ones
• Designate a power of attorney
• Name the person who will make decisions regarding your health care and finances
• Help minimize taxes and estate expenses

Estate planning checklist

To finalize an estate plan or get a new one started, here are seven items to include on a checklist.

1. Take inventory of assets

A good place to start the estate planning process is to create a list of all the properties and tangible possessions owned, including:

• Collectibles—jewelry, trading cards, rare coins, artwork, etc.
• Vehicles—cars, motorcycles, boats, aircraft
• Housing—house, condo, land, or other properties

Next, make a list of all intangible assets, for example:

• Checking and savings accounts
• Stocks, bonds, and mutual funds
• Certificates of deposit
• Proof of Business Ownership
• Retirement accounts—401(k) plans, individual retirement accounts
• Health savings accounts
• Life insurance policies

Once an inventory is created, gather any estate planning documents, like recent statements from the bank, life insurance company, and retirement accounts, and estimate the value of each item using appraisals or account statements.

2. Assign a power of attorney

Naming a financial power of attorney (POA) will grant someone the authority to manage your finances and make decisions on your behalf if you’re medically unable to do so. A designated agent can act on behalf of a person in legal and financial situations, access and manage assets, and pay bills and taxes. Without a power of attorney, a court may decide what happens to an estate if a person is found incapable of managing it and a probate judge will appoint a guardian or conservator to oversee the management of the estate.

3. Finalize will and trusts

A will is an important part of an estate plan and dictates how assets will be distributed after your death and who will be the guardians of your minor children. This legal document outlines the distribution of assets after death and generally includes designation of an executor, beneficiaries, instructions for how and when they will receive the assets, and guardians to any minor children. The wording in a will should be consistent with how allocated assets are outlined in other documentation, such as insurance policies or retirement accounts, to prevent it from being contested.

Remember, that without a will, an estate may be left to state officials who will decide how beneficiaries will receive a person’s assets. A lawyer can draft a will for you, or you can prepare one yourself using online resources. If a person chooses to draft one themselves, they will need to sign it in front of witnesses. Witnessing laws vary by state, but typically it is two witnesses who are not mentioned in the will.

A trust allows a person to designate portions of their estate to a trustee while they’re still alive. Unlike wills, most trusts cover a specific asset, such as a piece of property, rather than an entire estate. A trust is often set aside for underage beneficiaries who can only claim it when they are old enough to manage assets.

4. Name beneficiaries

Naming your beneficiaries is an important aspect of the estate planning process, and it can help bypass probate and save the beneficiary time and money on gaining access to funds. Naming a primary—and sometimes secondary—beneficiary is likely required on bank accounts, individual retirement accounts, life insurance policies, annuities, and brokerage accounts. Regularly review these designations, especially after certain life events like the birth of a child, marriage, or divorce. Like wills, trusts, and power of attorney, if a beneficiary is not named or the beneficiary is underage or has passed away, a court will likely decide what happens to the estate.

5. Appoint a guardian

A key document to include in an estate plan is a guardian designation. This allows an individual to name a person to act as a guardian should they become incapacitated, as well as designating a guardian to any minor children or children with special needs if they passed away. If a guardian is not appointed, the court will often decide who will take care of the children.

6. Include a letter of intent

A beneficial piece to add to an estate plan is a letter of intent that outlines personal and final wishes in more detail. These letters are not legally binding but can be added to an estate plan to provide more information about funeral and burial arrangements, financial information, digital information, and personal items. While this document is not considered a valid legal document, it can help a judge understand your intentions, which will aid in the distribution of your assets.

7. Connect with the experts

Partnering with a financial professional, attorney, and/or estate tax professional can help ensure all estate planning documents are in order or get the ball rolling to get an estate plan completed. These experts can simplify the process, discuss your personal goals, clarify inheritance taxes and state regulations, and be a go-to resource for family members after you’re gone.

Whether an action plan is created on your own or with the guidance of a professional, creating a sound estate plan can help boost confidence about the distribution of assets, minimize legal and tax issues, and ensure loved ones understand how to honor your final wishes.

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REV 3/2024