6-Step Estate Planning Checklist
Estate planning is no easy project. Taking stock of your assets and thinking about the future of your loved ones is an emotionally and physically draining experience. We’re here to help by breaking down the process into digestible steps so it’s not as overwhelming. With this planning checklist, you can rest assured that you have control over your estate and minimize stress for the people closest to you.
Key takeaways:
Estate planning requires a detailed organization of your assets so you can plan for them after you pass.
Estate planning can be a daunting process, but it can also be straightforward if you break it down into a few simple steps.
What is estate planning?
As you transition into retirement, estate planning might be something that’s top of mind. Estate planning is the process of preparing and organizing your personal assets collected over the duration of your life, so you and your loved ones know what will happen to your belongings after you pass. There are a number of moving parts and materials to gather for the estate planning process. As you start on this checklist, you’ll want to think about:
Drafting a will: This is a legal document that records what you want to do with your assets when you're not around anymore.
Organizing a trust: A trust is a legal arrangement that allows a person you trust to take care of your assets until you wish for your beneficiaries to officially inherit them after you pass away.
Power of attorney (POA): Granting someone power of attorney means that you give them the right to make legal, financial, or medical decisions on your behalf if you are no longer able to make decisions for yourself.
Healthcare directive: This is a document that states what you’d like to do about medical treatment in case you aren’t able to speak for yourself.
Beneficiary designations: Beneficiary designations make sure that you have control over who gets your money from life insurance life policies, retirement accounts, and other financial accounts once you pass away.
Guardianship designations: If you have kids and something happens to you, you can appoint someone to take care of them.
Estate tax planning: There are strategic estate tax planning tactics you can put into place so the government doesn't heavily tax your estate when it's passed on to your family. It may include gifting assets, setting up trusts, and taking advantage of tax exemptions.
Business succession planning: If you own a business, this planning ensures that your business goes to the right people or is handled in the way you want.
Now that you're familiar with some of the key parts of estate planning, let’s dive into the 6-step checklist.
Checklist item #1: Collect all useful documents
Estate planning requires collecting many documents to set up a trust for your beneficiaries, draft a will, and make the rest of the process easier. It's important to keep your documents organized and within easy reach. Here’s a list of some materials to begin keeping track of:
Insurance policies, like life and disability insurance
Statements for retirement savings, savings accounts, and other investments
Information on real estate holdings
Documents that prove your ownership of certain assets like mortgages, deeds, and titles
Important business documents (if own a business)
Statements for any debt you have
Personal documents like your birth certificate, marriage certificate, and Social Security card
Checklist item #2: Take inventory of all your assets
You might think that your estate is made up only of the highest value items you own, like a car or a home. Your estate is actually everything you own, no matter how modest. Making a list of what you own is one of the most important steps in starting your estate plan, so you can keep track of where it goes after you pass. It might be easier to start with all of the physical assets you and your loved ones may care about like:
Furniture
Jewelry
Property
Items of emotional value (paintings and other art pieces)
Vehicles
Once you have the physical assets taken down, you can start compiling information about your monetary assets, including bank accounts, businesses, savings, bonds, and investments, and life insurance policies. Make sure you also jot down any debts.
Checklist item #3: Make a list of your beneficiaries and heirs
Once you have a list of your assets and liabilities, it’s time to think through your beneficiaries and heirs. Having a list of assets can help with this part—you might have a better idea of which loved ones to give certain belongings to. The most obvious beneficiaries and heirs will include your immediate family members (like your spouse and children). You can also leave things to people and organizations you care about that aren’t part of your family.
You’ll want to keep beneficiary designations up-to-date on insurance policies, retirement accounts, and other financial assets to accurately reflect changes in your life. We’ll talk more about this in detail later, but keeping your estate up-to-date can minimize tension and arguments, ensuring a fair and smooth transfer of assets.
Checklist item #4: Choose your power of attorney, trustee, and executor
It’s important to not only choose who your belongings will be left to but also who can make decisions on your behalf when you are no longer able to. Setting this plan early on can make it much easier to know what to do in the event of an emergency. Once you choose someone fit to be your power of attorney, trustee, and/or executor, keep them updated regularly about your plan in case anything changes.
Checklist item #5: Draft a will
At this point, you’ve taken the first steps in outlining your wishes for your estate. You understand the value of everything you own, which beneficiaries and heirs you want to leave your assets to, and who you want to handle the process when you pass. Now you can begin drafting your will. You may want to consult with a lawyer before you begin writing for added peace of mind. If your estate planning process is simpler, you can use online tools to draft a legally binding will too.
Checklist item #6: Keep your estate plan updated
The one potential drawback to planning too far in advance is that you’ll have to continually update your estate plan. Many life events can occur as you start planning for your assets. You could get married, divorced, have children, buy a house, or sell your business—all of which affect your plan for your estate. Make sure you update your estate documents regularly to account for all of your assets and minimize stress for those you love.
While not the most exciting task, estate planning is important. There’s a lot to handle when someone passes—from organizing funeral services to settling taxes. Taking the guesswork out of how your estate will be divided is one way you can help your loved ones and reduce the chances of tension between them after you pass.