Six Essential Steps For Your Estate Planning Checklist
Make sure your legacy is fully protected
When you're creating or revising an estate plan, you need to think holistically and take a comprehensive approach. Small details can have a big impact on your family's future. Here are six key steps to ensure that you have an estate plan that accurately reflects your priorities and secures your legacy.
1. Understand your goals and priorities
Estate planning is a highly personal process. There are legal requirements, to be sure, but there is also a lot of discretion based on what you want your legacy to be. Before getting into the weeds of your estate plan, give some thought to the relative importance of your estate planning priorities, including:
- Making sure your children, grandchildren, and other family members are provided for.
- Protecting your assets and keeping your hard-earned wealth in your family.
- Protecting your family's privacy.
- Ensuring a smooth transition upon your passing.
- Avoiding probate (to the extent possible).
- Contributing to charitable causes that are meaningful for you.
- Making sure your wishes are honored if you become incapacitated.
2. Take stock of your assets and debts
Your estate will consist of the total value of your assets, so it's critical that you have a full accounting of what your assets are. That includes real estate, vehicles, stocks and investments, bank accounts, valuable possessions such as jewelry or art, retirement accounts, businesses, life insurance, and other death benefits. Ideally, all of your assets should be accounted for in your estate plan; if you have assets that fall outside your plan, it's up to the probate court to decide where they go.
It's just as important to understand what your debts are: mortgages, auto loans, credit cards, business loans, legal judgments, medical debt, and so on. While debts cannot be passed on to your heirs (unless they are co-signers or joint account holders), your creditors can and will go after your estate for repayment. This can significantly reduce or even eliminate your estate.
3. Identify your beneficiaries
Your beneficiaries are all the people and organizations that will receive a portion of your estate: your spouse, children, other relatives, and potentially charitable organizations or other beneficiaries. To create an estate plan, you need to identify these beneficiaries and prioritize them based on your goals. If some of your beneficiaries are minor children or incapacitated adults, you need to also put a plan in place to manage inherited assets on their behalf, such as a trust.
4. Determine who will manage your estate
There are several people you need to name to manage different aspects of your estate plan. Your personal representative or executor is responsible for managing your estate and distributing your assets to your beneficiaries and heirs. You can also grant power of attorney to someone else to manage your affairs if you become incapacitated. And if you create a trust, you need to designate a trustee to manage the assets in the trust on behalf of your named beneficiaries.
There are several considerations when choosing a personal representative or other role in your estate plan, including:
- Is this person knowledgeable and capable of handling the responsibility?
- Is this person already familiar with your property and affairs?
- Is this person geographically nearby and logistically able to manage your property?
Remember, you don't have to pick the same person for each responsibility; you can name one person as your executor and someone else as your power of attorney or assign different powers of attorney for healthcare and financial decisions. We recommend naming one person for each responsibility to avoid potential conflicts and litigation, but it's also important to name at least one alternate in case your first choice is unable or unwilling to serve.
5. Revisit your estate plan frequently
No matter how thorough your estate plan is, you can't account for every potential change. As your children get older or your financial situation changes, your estate plan should be updated to ensure your goals are still accurately represented — or because your goals and priorities themselves have shifted.
We recommend revisiting your estate plan every five years and after any major life events, such as marriage, divorce, birth or adoption of a child, death of a spouse, retirement, and so on. You also need to revisit your estate plan after acquiring a significant asset, such as a business or real property, to ensure it's accounted for.
6. Get professional help from an estate planning attorney
Legal representation is critical to creating the best possible estate plan to achieve your goals. First, an estate planning attorney can talk through your goals, priorities, assets, liabilities, and so on to help you refine your objectives and develop a holistic estate plan to achieve those objectives. Second, we can review your estate planning documents to ensure that they comply with Arizona and federal law and will protect your wishes and your legacy.
If you need to create an estate plan or update an existing plan, we'd be happy to talk through your goals and explain your options. Contact us today for a consultation with an experienced Arizona estate planning attorney at Brown & Jensen.