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9 Simple steps for estate planning

9 Simple steps for estate planning

  1. Make a will.

In your will, you state who you want to inherit your personal and other property, you appoint a person responsible to effectuate your wishes and name a guardian to care for your young children and a trusted person to take care of their inheritance should something happen to you while kids are still minors.

  1. Set up a trust.

If you hold your property in a living trust, your survivors won’t have to go through a prolonged and expensive a probate proceeding. You can also provide for a trust in your Will which is necessary if the beneficiaries are minors. Through a trust you can ensure that your estate passes only through bloodline (from children to great children) and protects assets from children’s creditors. You should name a trusted person to manage any funds and property for your beneficiaries.

  1. Make health care directives.

Writing out your wishes for health care can protect you if you become unable to make medical decisions for yourself. Health care directives include a health care proxy and a living will, which gives someone you choose the power to make decisions if you can’t.

  1. Make a financial power of attorney.

With a durable power of attorney for finances, you can give a trusted person authority to handle your financial affairs if you become incapacitated and unable to handle it on your own. For digital assets, consider a Digital Authorization to allow your attorney in fact to have access and properly manage all your online accounts and electronic devices.

  1. Update beneficiary forms.

Naming a beneficiary for bank accounts and retirement plans makes the account automatically “payable on death” to your beneficiary and allows the funds to skip the probate process. Consider setting up payable-on-death account at your bank and deposit funds into it to pay for your funeral and related expenses.

  1. Consider life insurance.

If you have young children or you may owe significant debts or estate tax when you die, life insurance may be a good idea. If children are minors, the policy should be paid into a trust for the benefit of your children.

  1. Understand taxes.

Most estates won’t owe federal estate taxes, but it is important to do a planning to make sure to get the best income tax results for the property that is being gifted or passed on by inheritance.

  1. Protect your business.

If you’re the sole owner of a business, you should have a succession plan. If you own a business with others, you should have a buyout agreement, coupled with a life insurance policy.

  1. Store your documents.

Your attorney-in-fact and/or your executor may need access to the following documents:

  • your estate planning documents
  • insurance policies
  • real estate deeds
  • certificates for stocks, bonds, annuities
  • information on bank accounts, mutual funds, and safe deposit boxes
  • information on retirement plans, 401(k) accounts, or IRAs
  • information on funeral prepayment plans, and any final arrangements instructions you have made.


About the Author

Viktoria Beress
Viktoria Beress

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