Estate Planning Checklist: Five Key Steps To Protect Your Family


Estate planning is an uncomfortable subject for a lot of people. And because it is so uncomfortable, many people find reasons to keep putting it off.

Here’s the reality: Planning your estate is one of the most important things you can do for your family and your loved ones.

Putting an estate plan into place can save your loved ones a tremendous amount of time, energy and money - and it can help to avoid damaging disagreements and disputes between your heirs.

There are five important topics that you must consider to be sure that your family and your loved ones are protected. Let’s dive in!

1. Guardianship

Who’s Going to Care for Your Kids?

If you have kids under the age of 18, this is perhaps the most important and immediate decision that you need to make.

If you and your spouse pass away, who is going to raise your children?

There is so much to consider. Who are your kids going to be comfortable with? Who do you trust to take care of them? Who shares your values? Who will raise your kids most similar to the way you would have?

Ultimately this is a sensitive, personal decision and it’s important that you and your spouse think it through carefully.

In addition to naming a “permanent” guardian, you should also think through temporary guardians in the event that your permanent guardians are traveling or otherwise unavailable when you pass away.

If you don’t make these decisions, the court system is going to make them for you. Don’t let that happen.

2. Life Insurance

Make Sure Your Family’s Financial Needs Are Met

How will your family pay the bills if you pass away and can no longer provide an income? How will your kids pay for college? Life insurance is an important tool to make sure that your loved ones are taken care of financially should you pass away.

A good rule of thumb is that your insurance policy should be roughly 10 times your annual salary.

That means if you are earning a salary of $150,000 per year, you’d likely want a life insurance policy worth $1.5 million. Of course, there are many important variables to consider when deciding on the right coverage amount. You can work with a qualified financial advisor to get these policies in place if you don’t already have them.

It’s critical that you have your beneficiaries properly named within your life insurance policy - making a mistake in this area can create major complications should you pass away unexpectedly. For example, if you have minor children and you don’t properly name your beneficiaries, the adult taking care of your children may not be able to access the money until they turn 18.

You want to make sure that your life insurance is properly structured and identified within your estate planning documents so that the proceeds are distributed in the way you would like them to be distributed should you pass away.

3. Trusts

How Will Your Assets Be Distributed?

A trust is an important estate planning tool that basically determines how and when your assets should be distributed after you pass away. Many people think that trusts are only for the ultra-wealthy, but the reality is that trusts are accessible and valuable for most people. If you own a home, you should have a trust in place as part of your estate plan!

There are many benefits of using a trust as a part of your estate plan - including that it will help you avoid probate and minimize taxes after you pass away. These are two big deals. Probate is a legal process that can sometimes delay your assets being distributed for many months or even years. And obviously, the lower your taxes, the more money goes to your loved ones instead of to the government.

If you have children under 18, a trust can also be used to detail how and when you want them to receive their inheritance. It’s not generally a good idea to give an 18-year-old a big lump sum of cash, and your trust will allow you to distribute their inheritance over time however you see fit.

There are many strategic variables that go into creating an effective trust.

4. Powers of Attorney and Living Will

What Happens if You’re Incapacitated?

What do you want to happen if you’re medically incapacitated? Powers of attorney appoint others to make financial and medical decisions on your behalf if you’re unable to do so.

In addition, you can create a living will to express your wishes in the event that you’re incapacitated. For example, some people may wish to include a “Do Not Resuscitate” order in their living will.

Estate planning tools that you can use to communicate these orders include:

  • Durable financial power of attorney

  • Health care power of attorney

  • Living will

If you or your spouse own a business, it’s important that you also think through these decisions in that context. Who will run your company if you are incapacitated? How and when will you step back in after you recover?

Each of these estate planning tools has a specific purpose and must be created properly in order to have legal standing.

5. Keep Your Plan Current

As Your Life Changes, Your Estate Plan Needs to Be Updated

Your estate plan is intended to be a living, breathing document - and as your life changes, your estate plan needs to be updated.

For example, here are several common reasons you may need to update your plan:

  • Marriage
  • Divorce
  • Death of a loved one
  • Falling out with somebody named in your will
  • Retirement
  • Health scare
  • Health diagnosis for yourself or a loved one
  • Memory impairment
  • Minor child turns 18
  • Birth of a child
  • Adoption of a child
  • Purchase or sale of a business
  • Purchase of a rental property
  • Moving your family to a new state

And there are many more circumstances that could change and would then need to be updated in your estate plan.

As a general rule, it’s a good idea to review your plan at least every one to two years - or anytime there are any major life changes.


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