Estate Planning Checklist

What is an Estate Plan?

An estate plan is a collection of legal documents that help with the management of a person’s assets and medical decisions in case of incapacity or death. Depending on your level of wealth and your family situation, your estate plan can be very simple or more complex.

For high-net-worth individuals and families, sophisticated estate planning solutions can provide significant savings on gift, estate, and generation-skipping transfer taxes. But estate planning is certainly not just for the very wealthy. Middle class families can benefit from effective estate planning to facilitate the transfer of their assets both during their lifetime and at death.

There are several important legal documents that are a crucial part of any estate plan, these include a last will and testament, incapacity documents, and for most cases, a revocable living trust. Whether you are considering an estate plan for yourself, a loved one, or if you would like to ensure your current estate plan meets your needs, learning more about these essential legal documents should prove valuable to you.

In this article, Let’s create an estate planning checklist, the role of these common estate planning documents, and why you want to make them part of your estate plan.

What is the Goal of your Estate Plan?

The specific purpose of your estate plan might vary depending on the particulars of your situation and your stage in life. Your main goal might be to make sure your spouse and children are taken care of after you are gone.

Amongst the most common benefits of effective estate planning are minimizing or eliminating gift and estate taxes, reducing future medical, court, and legal costs, deciding who will continue to raise your minor children if you are not able to do so, and deciding who will make medical and financial decisions on your behalf.

Additionally, estate planning can protect you and your family’s privacy, help your family members when facing difficult end-of-life decisions, and deciding who receives your property and when.

In general, your estate plan should determine what will happen to your assets after you pass away and simplify the transfer process when the times comes. In addition, a well drafted estate plan should also anticipate what should happen if you are ever incapacitated.

Your incapacity documents should name an agent who can make financial and medical decisions on your behalf in case you are ever incapacitated. That means your agent will have the authority to make decisions on your behalf without having to petition a court to confirm your incapacity and name an agent of their choosing.

Well drafted incapacity documents should also include your wishes and instructions to provide your agent with much needed guidance when faced with significantly challenging choices for you.

Below is a quick checklist of the most essential estate planning documents:

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Estate Planning Checklist
Revocable Living Trust Establishes a plan for the administration and distribution of assets after death. Names a person who will manage the trust assets in case of death or incapacity. Property needs to be transferred into the trust in order to take effect. Can provide asset protection to beneficiaries if inheritance is left in trust.	Last Will and Testament Names the beneficiaries who will receive any assets remaining after death. Determine an executor who will be responsible for the handling of the estate. Original document needs to be presented to the probate court. Probate court will oversee the handling of the estate and hear any potential claims.
Financial Power of Attorney Selects a person who will handle financial transactions in case of incapacity. Principal can decide how much authority to grant the agent. Commonly used to pay bills on behalf of principal, access bank accounts, potential to gift assets. Bypasses the need to request the court to grant this authorization.	Medical Power of Attorney Selects a person who will handle medical decisions in case of incapacity. Incapacity often defined as the opinion of two different physicians or a court order stating incapacity. Can work together with a living will that outlines a person’s wishes in case of incapacity.
Guardianship Designation If you have minor children, this document establishes who should take care of them in case you are incapacitated or pass away. Guardianship Designation can be written into a last will and testament or be a standalone document.	Beneficiary Designations Financial accounts, insurance policies, and pensions can often be transferred at death via beneficiary designations filed directly with the financial institutions. Accounts with valid beneficiary designations pass outside of probate.
HIPAA Release Allows your physician and other medical professionals to share your confidential medical information with your family members, medical professionals, or others.	Living Will An advance care directive that contains instructions in the event that you are critically ill. Some individuals may not want to be put on life support or have resuscitation measures taken if they are necessary.
Insurance and Financial Documents Create a list of financial accounts, insurance policy documents, credit cards, mortgages, and other loans. Allows family members or others to pay loans and avoid foreclosure, lapses in insurance coverage, etc.	Last Wishes and Funeral/Burial Directive Wishes for the funeral can be set out ahead of time in a directive to guide people. Many people make decisions whether they will wish to be buried or cremated.

Documents You Will Need

At the very least, your estate plan should include a last will and testament as well as incapacity documents. A last will and testament determines what will happen to your belongings after you pass away. When a person passes away, the original will needs to be sent to the local probate court together with a death certificate. This puts the court on notice that the person has passed away and that a legal case will likely begin soon.

The administration of the last will and testament happens under the supervision of a probate judge in a process known as probate. The probate process is meant to protect the creditors and beneficiaries of the estate by making sure everything happens under the watchful eyes of the court, but the result is a lengthy and costly process where experienced attorneys are almost always needed to help navigate the process. Since probate is a lengthy and often expensive process, it is best avoided, if possible.

One the other hand, if you do not have a last will and testament in, your estate will still need to be probated by the court, a process known as intestate probate. When an estate goes through an intestate probate proceeding, it is the government that will decide who gets the property.

The default laws of the state you live in at the time of your passing will govern the distribution of your estate. Unsurprisingly, these default state laws often do not reflect peoples’ wishes. Instead of having the power to name the executor of your estate, during intestate probate, the court will require that a Personal Representative is determined from the surviving family members according to a priority spelled out in your state’s laws.

This process can turn contentious if more than one person wants to take on the responsibility. If probate proceedings seem inevitable, whether you have a valid last will and testament or not, how do you avoid probate? The answer is using a revocable living trust.

Why You Should Consider a Trust

In most cases, you will want to use a revocable living trust to manage the bulk of your estate instead of relying on a last will and testament. A revocable living trust is a legal contract that can be used to hold title to numerous assets and can be amended or revoked by the trustor during his or her lifetime.

Trusts can be used to hold real estate, bank accounts, shares of businesses, cryptocurrencies, and other financial instruments. A trust can be settled by an individual, or together by a couple, which are known as Joint Revocable Trusts.

While a last will and testament is an important document, having a revocable living trust can give you more control over what happens to your assets after passing away and can provide the beneficiaries with some degree of asset protection if their inheritance remains in trust.

It is common for trusts to state that beneficiaries will receive their inheritance in staggered sums after reaching the age of thirty to protect children from potential mishaps during their youth.

A well drafted trust also helps prepare your family or other trusted contact persons to manage the trust assets in the event of incapacity. The terms of the trust include naming a successor trustee who will administer the trust after you are incapacitated or pass away.

The successor trustee can be a responsible family member or a professional fiduciary. This means you will know who will be left in charge of the trust assets in the future.

More importantly, assets transferred through a trust pass outside of probate, and without the involvement of a court. This makes revocable living trusts powerful estate planning solutions that can be beneficial for almost all families.

Estate Planning and Asset Protection

During the lifetime of the grantor, a revocable living trust can be amended almost at any point and for any reason, as it is considered a mere extension of the person who created the trust. Because of this, revocable living trusts do not provide any asset protection until they become irrevocable. When the grantor passes away, a revocable living trust automatically becomes irrevocable.

A revocable living trust can also become irrevocable if the trustor decides to amend the trust to make it so. At that point, it becomes a more rigid structure that is considered an independent legal entity and it is harder to amend the terms of the trust.

When assets are kept in an irrevocable trust, the beneficiaries can enjoy asset protection on their trust assets. If an independent third party is managing the trust, the beneficiaries have no direct control of the trust assets and thus cannot be forced to distribute assets out of the trust in case of a lawsuit. Through the use of revocable and irrevocable trusts your estate plan can gain additional benefits for your future heirs.

Making A List of Your Assets and Liabilities

In addition to your signed estate planning documents, having a list of your assets can allow your beneficiaries to know the extent and details of your estate after you pass away. Having property titles and property deeds can make it easier for your trustee or executor to administer your estate.

Bank and financial statements can help beneficiaries locate where funds are held and determine if any accounts were held individually, in trust, or if accounts had transfer-on-death instructions. Financial institutions are often reluctant to share any information with third parties until they have received a death certificate, which can take time.

If you created a revocable living trust, the property documents allow the trustee to verify what assets have been transferred to the trust. The mortgage and other loan documents can help clarify what payments should be paid on your behalf or on behalf of your estate and avoid having to deal with impending foreclosure proceedings, repossessed assets, or unpaid property tax bills. If the estate needs to go through probate, bills can help identify potential creditors of the estate.

You should store these documents in a safe place that is accessible to your loved ones. If you plan on using a safe deposit box, ensure someone else knows of it and can access it without you being present. Similarly, if you are using a safe located in your home, make sure someone knows where it is and how to open it.

In short, while not technically part of your estate plan, these documents can certainly make a large difference to your beneficiaries but only if they can access and locate them when the time comes.

Why Should You Get an Attorney?

While there are numerous resources you can rely on to draft your own estate plan, there is no substitute for working with an experienced estate planning law firm. The estate planning process requires knowledge of your assets, retirement plans, family situation, personal goals, etc.

Too often estate planning professionals are faced with common mistakes people make when drafting their own documents. People often fail to keep in mind that estate planning documents need to be easily understood not just by the surviving family members but should also be unambiguous to the judges and attorneys who might have the responsibility of interpreting them in the future.

An experienced estate planning attorney can work with you to put together a strategy and identify any potential gaps in your estate plan. As your situation changes over the years, having an attorney you can consult can help you make informed decisions regarding whether your estate plan needs any changes or updates.

Finally, an estate planning attorney can keep you up to date in case any legal changes were to occur in the relevant legislation that might alter your plans. If you would like to learn more about setting up or updating your estate plan, contact Blake Harris Law today. Our consultations are offered at no cost and with no obligation on your part.