How to Create an Estate Plan

Couple reviewing their estate plan with a younger family member

On a basic level, if you have an estate plan, you control who will receive your property upon your death. An estate plan can also protect you in the event of an unforeseen life-altering medical emergency. It can protect your beneficiaries’ inheritance from losses, their time, their privacy and their peace of mind. It can help you give to important causes and even leave a lasting legacy. 

Most Americans need an estate plan of some kind, and most Americans don’t have one. If you’re not sure where to get started, use this checklist as you take the important step in creating an estate plan. 

1. Take stock of what you own.

  • Do you own a home, a vacation rental, land or other property? 
  • Do you own any vehicles, motorcycles or boats? 
  • Do you own any valuable personal items, including antiques, jewelry or fine art? 
  • Do you have a checking and savings account? 
  • Do you have a retirement account? 
  • Do you have any investments, including stocks, bonds and mutual funds? 
  • Do you have life insurance policies? 
  • Do you have a health savings account? 
  • Do you have any business interests? 

If you answered yes to any of these questions, gather relevant documents that express their value so you can outline what property you can distribute in an estate plan. 

2. Compare your estate planning options, namely wills and trusts.

While a will can determine who will receive your assets outright, a trust gives you the opportunity to decide how and over what period of time or at what age your property or assets may be distributed to your beneficiaries. 

Unlike a will, a trust can also include an incapacity clause stating who you want to manage your affairs in the event you are unable to. Whether you opt for a trust or a will, it’s important to have a durable power of attorney and health directive to help address those issues. 

3. Identify your beneficiaries.

Most people transfer wealth to the next generation and immediate family, but your beneficiaries could also include grandchildren, nieces, nephews, godchildren, a lifelong friend, or others. 

It’s important to consider whether your beneficiaries share the same values as you. Do they have the financial knowledge to responsibly handle an inheritance? How well do they manage their own finances? What are their attitudes toward saving, spending and investing? These questions can help guide your decision-making process. 

If you choose to pass all or parts of your wealth directly to grandchildren or other minors, it’s important to be aware of certain limitations that come with that decision. Most insurance policies, retirement accounts and investment accounts will not directly transfer to a minor who is named as a beneficiary. Instead, those accounts need to be received by a court-approved guardian or trust. That’s because laws prevent anyone under age 18 from receiving large lump sums. 

Multigenerational wealth planning is an area that your financial advisor is well-equipped to address. Set up an appointment to receive valuable advice and guidance regarding minor beneficiaries. 

4. Outline your wishes for your funeral and end-of-life and medical care if you are incapacitated.

Planning a funeral and making life-or-death decisions about your loved ones are both incredibly fraught and emotional processes. You can spare your family that difficulty. 

Plan your funeral – and even pay for it in advance – to relieve that burden. You can be as detailed as you like to make sure your wishes are carried out. 

Similarly, you should determine how your affairs should be managed – including health care decisions – if you’re not able to do so because you are incapacitated. 

5. Find an estate planning attorney.

Even fairly simple estates can feel overwhelming if planning isn’t your specialty, and of course the more complex cases come with their own headaches. Working with an estate planning attorney can take the pressure off you and give you confidence that your plan will take care of your loved ones, as you designed it. 

An estate planning attorney will customize your plan to your needs, ensure the plan complies with the law and can work with your financial advisor to confirm your will coordinates with your financial accounts, your savings plan and your legacy wishes. 

6. Routinely revisit your estate plan.

You cannot set and forget your estate plan. It’s important to review your plan periodically. State statutes could change, and so could your life circumstances. For a fee, some estate planning attorneys will review your estate plan every six to 12 months. If you’re not interested in this option, plan to check in every three to five years and after these triggering events: 

  • Marriage 
  • Divorce 
  • Buy or sell a home 
  • Birth of children 
  • Birth of grandchildren 
  • Adult child facing divorce 
  • Change in employment 
  • Change in physical or mental health in you and/or a loved one 

7. Work with a financial advisor.

A qualified financial advisor can help you begin the estate planning conversation in a way that makes sense for you and your loved ones. They know your holdings, and they also understand your goals and values. Armed with that knowledge, they can help you shape a legacy that cares for the people and causes you love. 

A Carson Wealth advisor will make sure your financial and estate plans are in sync and can help you address commonly overlooked items that can create risks and complications for your loved ones. Collaboration is key to making sure everyone involved in the planning process is on the same page and doing their best work to serve your needs. 

Your financial advisor can also hold you accountable. It’s not uncommon to start the estate planning process and lose focus. Some people do all but sign their plan. Let your financial advisor get you across the finish line. 

Need help finding a financial advisor who will put your needs first? Let us match you with a Carson Wealth advisor today.  

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