Estate planning is the process of creating a plan to manage your assets if you become incapacitated while you are alive and a plan to distribute your assets after your death. An estate plan also gives directions for the care of any minor children you may have. And while that may sound a bit complicated, it really isn’t as hard as you might think. In fact, the process can be broken down into three easy steps.
Step 1: Identify your people
To create an effective estate plan you need a qualified professional (usually an attorney) to help you through the process. While there are many online “do-it-yourself” options, those tools rarely look at your entire family and help you identify goals for your plan. Taking the time to select the right person to help you create a plan that reflects your unique needs will leave you confident with the end result.
After you have your professional guide identified, you need to list who you currently support, such as a spouse, minor children, or adults with disabilities. An important part of your plan will be to ensure they still have the care they need if you are unable to manage your own assets due to incapacity or death.
You also need to identify who you want to benefit from your estate after you are gone. This could include your spouse, children, and grandchildren, but may also include other family members, friends, and charities. If appropriate, you can also decide who you don’t want to benefit from your estate. You get to choose how you want your assets distributed after your death.
Finally, you need to identify who you want to act for you either when you are alive and unable to act on your own behalf (frequently called incapacitated), or after your death. Frequently people select the same individuals to act for them when incapacitated and after death, but not always. This is a personal decision and it is okay for you select different people to make health care decisions than financial ones.
Pro Tip: When making a list of the people you want included in your estate plan, be sure to verify the spelling of their names and make sure you have their address and phone number. For spouses and children, it is also handy to have birthdays, and if appropriate, marriage dates and death dates. Remember to list all children, even those who may have passed before you, and those you wish to disinherit. It is all included in your final estate plan.
Step 2: Document your assets…and your debts
Because a major part of estate planning is deciding how you want your assets managed if you become incapacitated or distributed after you die, it is vital you know what those assets are.
Make a list of what you own, the money you have, and the debts you owe. Some areas to focus on include:
- Real estate (make sure to include information on any mortgage you may have)
- Bank accounts
- Retirement accounts
- Other investment accounts, stocks, bonds, and brokerage accounts
- Automobiles, boats, trailers, and other vehicles (make sure to include information on loans)
- Life insurance
- Business interests
- Money you owe
- Money owed to you
- Business interests
Pro Tip: This may feel like a big list, but you probably have most of this information in your home right now. A simple way to get started is to collect your statements and bills for one month and then go online to print out any statements or account details you may have missed.
While this information is not required to set up an estate plan, it will help your professional advisor determine which estate planning options will best fit your needs. It is okay if you know these things will change. That is expected. Right now it is important to know what your assets are so you can plan for the future.
Set 3: Develop your plan
This is where steps one and two come together. Sit down with your professional advisor and let them know a little bit about your family and your goals. Make sure they know about your assets, and your debts. Give them the information you have collected and tell them about the decisions you have made. Your advisor will ask questions to make sure you have made all the decisions you need to complete an estate plan, and then will create your estate planning documents.
Some people choose to create a will, while others use a trust as the backbone of their estate plan. Sometimes Supplemental Needs Trusts are created to provide for loved ones who have special needs and require access to government benefits. Most estate plans include powers of attorney for finances and health care along with HIPPA releases.
After you have signed your documents and had them appropriately witnessed and notarized, you will have a legal plan to support you and your family as you move forward.
Pro Tip: Don’t let your paperwork efforts go to waste! Put the records you gathered to help create your estate plan with your completed documents. This will help those who you have identified to act on your behalf in the future.
At Alan R. Harrison Law, we help you develop an estate plan using the Collaborative Legal Planning Process™. We know that creating as estate plan can feel complicated, so we meet you where you are and help you along the way. We guide you through the steps of identifying the people in your plan, and the type of plan you want to create. We draft all of your documents, and help you get them signed and notarized. It is important to us that you feel confident in your decisions and your completed plan reflects your values and wishes. With the right collaborative planning team, estate planning really can be as simple as 1-2-3!