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Where to Start When Estate Planning

by | Oct 11, 2024 | Estate Planning

Estate planning may seem like a daunting process; however, it is vital to ensure that your assets and loved ones are protected when you are no longer around. Whether you are thinking about putting together an estate plan or revisiting your existing one, there are two things you should know before diving in: (1) what you have and (2) where you want it to go.

First, you should know what you have. Take stock of all your assets. Your assets include real estate; bank accounts; retirement accounts including 401(k)s, IRAs, etc.; investments such as stocks, bonds, mutual funds; life insurance policies; and personal property including jewelry, cars, art, etc. Your assets may also include digital assets such as online accounts, cryptocurrencies, and intellectual property. You should also consider any debts and liabilities such as mortgages, credit card balances, personal loans, and any other outstanding obligations. Keeping your assets and debts in order will help you make informed decisions about managing your estate plan.

Next, you should know where you want your assets to go upon your death. This means designating who will inherit your assets and who will be the beneficiaries. Your beneficiaries can include your spouse, children, family members, friends, and even charitable organizations. Another common beneficiary may be your Trust if your estate plan requires one. Establishing a trust can pass your assets to the trust’s beneficiaries without going through probate – but more on that later. Additionally, you should look at your accounts and ensure that your beneficiary designations are up to date.

Along with knowing who you want your beneficiaries to be, you should also know who you would want to manage your estate upon your passing. Your executor will be the person who manages the administration of your estate, ensuring your assets are distributed and debts are settled. If you have minor children, you should designate a guardian to care for them if something happens to you. In the event that you become incapacitated, you should name someone to manage your financial and legal affairs and someone to make medical decisions for you. Also, consider naming backup agents in the event that those whom you originally appointed cannot serve.

Once you have determined what you have and where you want it to go, preparing the documents is easy. You should know what the documents entail and work with an attorney to prepare your estate plan. The standard estate plan will likely include a Last Will and Testament, Health Care Power of Attorney, Living Will, Financial Power of Attorney, and sometimes a Trust.

If you have assets titled in your individual name at the time of your death, which assets do not have a beneficiary designation, your Will will be admitted to probate, and those assets will be distributed to your heirs after the payment of creditors’ claims, in the manner you set forth in your Will. Assets that are titled with another person, joint with rights of survivorship, and assets that designate one or more beneficiaries will pass to the surviving owner or beneficiary, and not by the terms of your will. If you have minor children, your Will will also name the guardian you appoint to take care of them in the event of your death.

If your estate is one that would benefit from having a Trust, your Trust would be the core document of your estate plan. The Trust would provide instructions concerning the handling of trust assets in the event of your incapacity, distributions to your beneficiaries at the time of your death, and other important aspects of your estate plan. If you establish a Trust, you will work with your estate planning attorney to retitle some assets and name the Trust as a beneficiary.

One major estate planning goal is to make sure that all your assets are titled in such a way as to avoid probate administration of those assets at the time of your death. Thus, your Will will name your Trust as a beneficiary and act as a “safety net” to ensure that any assets that are not already titled to your Trust and that are subject to probate administration will pass to your Trust upon your death.

Your Financial Power of Attorney designates the agents who are authorized to make financial decisions on your behalf and to sign your name to carry out those transactions. This includes accessing your bank accounts, filing your tax returns, canceling credit cards, transferring property, etc.

Your Health Care Power of Attorney designates those persons that you wish to be responsible for making your health care and medical decisions on your behalf if, and only if, you are unable to do so yourself. Your Living Will constitutes your written direction to your physicians to withdraw life support in the event that you are either terminally ill or permanently unconscious.

Once you assemble your estate plan documents, you should work with your attorney, financial advisors, and accountants to ensure that your assets are titled properly, naming the correct beneficiaries. Also, depending on the size of your estate or the state you live in, estate tax might be an issue. Again, your attorney, financial advisors, and accountants can help structure your estate in a tax-efficient way.

Lastly, once your estate plan is established, you should review it regularly to make sure it is up to date and aligns with your current situation and wishes. Additionally, communicating with your loved ones that you have established an estate plan can help prevent any confusion or disputes after your death.

Estate planning may seem overwhelming, but by knowing what you have and where you want it to go, you are already halfway through the planning process. Beginning with organizing your assets, naming the right beneficiaries, appointing the right people, and working with legal and financial professionals are all the first steps to establishing your estate plan. The experienced attorneys at Cavitch, Familo & Durkin are here to help with your estate planning needs and wishes.

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ESTATE PLANNING CHECKLIST

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