The Estate Planning Process: 6 Steps to Take

As you go through life, you’re likely to accumulate some amount of wealth, assets and even just family treasures. What will happen to all those things if you die or become incapacitated? That’s where estate planning comes in. An estate plan allows you to legally specify your wishes and how you want them carried out. A well-crafted plan can help avoid disputes that may arise and can keep details about your family’s financial affairs private.

When you’re ready to work with a qualified attorney and financial planner to write your estate plan, here are some of the key steps in the estate planning process you’ll go through:

1. CREATE AN INVENTORY OF WHAT YOU OWN AND WHAT YOU OWE

   Compile a comprehensive list of your assets and debts, including account numbers and contact information, as well as names and contact information for your important advisers. Keep the summary in a secure, central location – along with original copies of important documents – and provide a copy of the summary for the executor of your will. This list could be a piece of paper or also a digital file kept in a secure location.
    

2. DEVELOP A CONTINGENCY PLAN

   An estate plan allows you to control what would happen to your property and assets if you or your spouse passed away today. It also puts a documented plan in place so that if you became incapacitated, your family could carry on your affairs without having to go through court. This includes a strategy for providing income if you were to become disabled and covering potential expenses for care giving that may be needed at some point.
    

3. PROVIDE FOR CHILDREN AND DEPENDENTS

   A primary goal for many estate plans is to protect and provide for loved ones and their future needs. Your estate plan should include provisions for any children, including naming a guardian for children under age 18 and providing for those from a previous marriage — if you remarry, your assets may not automatically pass to them. It also would specifically address the care and income of children or relatives with special needs that must be planned carefully to avoid jeopardizing eligibility for government benefits.
    

4. PROTECT YOUR ASSETS

   A key component of estate planning involves protecting your assets for heirs and your charitable legacy by minimizing expenses, and covering estate taxes while still meeting your goals. If necessary, your estate plan would include specific strategies for transferring or disposing of unique assets like a family-owned business, real estate or investment property, or stock in a closely held business. Many people use permanent life insurance and trusts to protect assets while ensuring future goals can be met.
    

5. DOCUMENT YOUR WISHES

   If you want your assets distributed in a certain way to meet financial or personal goals, you need to have legal documentation to ensure those wishes are followed if you die or become incapacitated. This includes designating beneficiaries for your life insurance policies, retirement accounts and other assets that are in line with your goals. It also means ensuring that titles of material assets, such as automobiles and property, are named properly. Work with an attorney to be sure you have an updated will disposing of your assets, a living will reflecting your end-of-life wishes, as well as powers of attorney for health-care and financial matters.
    

6. APPOINT FIDUCIARIES

   To execute your estate plan, you must designate someone to act on your behalf if you are unable to do so — as executor of your will, trustee for your assets, legal guardian for your dependents and/or personal representative or power of attorney if you became incapacitated. You need to be sure your fiduciaries are aware of and agree to their appointments, and that they know where to find your original estate planning documents. Fiduciaries can be family members, personal friends or hired professionals such as bankers, attorneys or corporate trustees.

Whether you are just starting out or have accumulated wealth over a lifetime, an up-to-date estate plan helps you minimize the impact of unexpected events on you and your family by preserving, protecting and managing your assets. A financial advisor can help you create a financial security plan to meet your goals, and provide tools and resources to build an estate plan that makes an impact well into the future.