Starting the Estate Planning Process

Regardless of how old you are or how much your things are worth, we all have things to pass on or instructions to leave for our loved ones.  The estate planning process is for everyone.

What would happen if you died tomorrow?  Have you selected someone to take care of your children?  Does your spouse know how to access the online accounts?  Have you made plans for your funeral?  Do your kids know you have a safety deposit box at the bank?  When was the last time you updated your will? Or do you even have a will?

Step 1: Start the Conversation

Bringing up estate planning can be a sensitive topic for spouses, parents, and children, but it’s important to talk with each other so you can make a plan that is right for everyone. Not sure what to say? Try using some of these conversation tips and take a look at our Estate Planning Conversations LiveSmart Blog.

Step 2: Determine Your Estate Value

This means making a list of your assets, aka your retirement accounts, bank accounts, real estate, insurance, trusts, personal property, investments, loans, mortgages, and other debts.  While you’re making that list, it might also be a good time to check that you have selected beneficiaries for your retirement accounts, and make sure that they are current.

You can also check your bank accounts to see if you have them set up as payable on death.  Having this set up will automatically pass money on to the person you choose at the time of your death and can prevent the accounts from going through the probate process.

Before you can decide what to pass on and to who, you need to have a good picture of what you have.  Purdue Extension has a great workbook you can download online.

Step 3. Set Goals

When you are having the conversation with family, take time to write down your goals.  Do you want to start a scholarship fund? Pass on the family business?  Are you trying to equally distribute items to children?  How will you define equal and fair?  Do you want to avoid probate?  Do you need to decide on guardianship for minor children?   Family heirlooms to pass on?

Step 4.  Plan for mental and physical incapacity

Have an attorney create durable power of attorney for health care decisions and financial decisions.  Think about who you would want to be able to make decisions for you if you’re not able to.  You don’t have to choose the same person to be power of attorney for health care decisions and financial decisions.  You will also want to create advanced directives in a living will about whether you would want your life to artificially prolonged or not.

Step 5. Get Professional Help

Once you’ve taken inventory, thought through your goals, and decided on who you would like to be your power of attorney, who you want to be the executor of your estate, etc. then you are ready to see the professionals who can make your goals a reality and help you create a will and/or trust.  Professional help may include an attorney, financial planner, CPA, etc.

Step 6.  Make sure your family is aware of your plan

If you don’t share with your family what your wishes are and where legal documents are located, there is a good chance that your wishes won’t be implemented when you pass away.  A good way to do this is to create a letter of last instruction and let family know where that one document is located.  The letter of last instruction shares your wishes and also all the detailed information of where important papers are located, who the attorney is, etc.  The University of Idaho has a great fillable letter of last instruction online to help you leave key information and directions in one place, or you can write your own.  Don’t forget to include online accounts as these can often be overlooked.

Step 7. Review and Modify

Review your plan annually or any time there is a major life change such as a divorce, marriage, birth, or death.