12 Simple Steps to an Estate Plan

You may have heard that you need to make an "estate plan," but what does an estate plan cover and how do to make one? Here is a simple list of the most important estate planning issues to consider.

1. Make a Will

In a will, you state who you want to inherit your property and name a guardian to care for your young children should something happen to you and the other parent.

2. Consider a Trust

If you hold your property in a living trust, your survivors won't have to go through probate court, a time-consuming and expensive process.

3. 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 declaration ("living will") and a power of attorney for health care, which gives someone you choose the power to make decisions if you can't. (In some states, these documents are combined into one, called an advance health care directive.)

4. Make a Financial Power of Attorney

With a durable power of attorney for finances, you can give a trusted person authority to handle your finances and property if you become incapacitated and unable to handle your own affairs. The person you name to handle your finances is called your agent or attorney-in-fact (but doesn't have to be an attorney).

5. Protect Your Children's Property

You should name an adult to manage any money and property your minor children may inherit from you. This can be the same person as the personal guardian you name in your will.

6. File 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. Likewise, in almost all states, you can register your stocks, bonds, or brokerage accounts to transfer to your beneficiary upon your death.

7. Consider Life Insurance

If you have young children or own a house, or you may owe significant debts or estate tax when you die, life insurance may be a good idea.

8. Understand Estate Taxes

The overwhelming majority of estates won't owe federal estate taxes. For deaths in 2023, the federal government will impose estate tax at your death only if your taxable estate is worth more than $12.92 million. (This exemption amount rises each year to adjust for inflation.) Also, married couples can transfer up to twice the exempt amount tax-free, and all assets left to a spouse (as long as the spouse is a U.S. citizen) or tax-exempt charity are exempt from the tax.

9. Cover Funeral Expenses

Rather than a funeral prepayment plan, which may be unreliable, you can set up a payable-on-death account at your bank and deposit funds into it to pay for your funeral and related expenses.

10. Make Final Arrangements

Make your end-of-life wishes known regarding organ and body donation and disposition of your body—burial or cremation.

11. 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.

12. Store your documents.

Your attorney-in-fact and/or your executor (the person you choose in your will to administer your property after you die) may need access to the following documents:

• will
• trusts
• 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 debts: credit cards, mortgages and loans, utilities, and unpaid taxes
• information on funeral prepayment plans, and any final arrangements instructions you have made.

Keeping your documents organized will be a great help to your survivors.

You can create a complete estate plan, quickly and easily, with WillMaker & Trust.