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Estate Planning Checklist for the “Just in Case”


We all think about estate planning at some time or another. But, how many of us actually follow through and then update our estate plans. Unfortunately, too many of us have incomplete or out-of-date estate plans and, as a result, some of the most important questions go unanswered.

Estate planning is critical to ensuring that your wishes are understood and family knows what you want them to do. Plus, the right forms and information in the hands of the right person helps ensure that loved ones don’t have to fight in court for the right to carry out your final wishes and that people you trust can access accounts and assets.

An Estate Plan is more than about assets
In legal terms, an “estate” is nothing more than the stuff you own. If you own stuff and have anyone on this planet whom you want to leave your stuff, then you need an estate plan. If you have a significant other, kids, and/or property, then you definitely need an estate plan.

When it comes to creating an estate plan, you can complete most of the work on your own (you may need to consult an experienced estate-planning attorney to execute some items, depending on the complexity of your finances or family life).

The first part of creating an estate plan is simply getting organized and accounting for what you own and owe, and where you have all your important documents. Here is a helpful checklist to get your started.

Estate Planning Checklist

  • A living will (or advance medical/healthcare directive). This gives the person you name the power to make medical decisions based on your wishes when you’re incapacitated.
  • A durable power of attorney. This lets you name someone to pay your mortgage, sign your tax returns, sell assets if needed, and generally mind your financial matters if you are incapacitated and can’t do so yourself. Without this document, the court may appoint a guardian to take care of these tasks.
  • An up-to-date will. If you don’t have a will, the state will decide who inherits your stuff without a full picture of your true final wishes. More importantly, a will is how you name someone to take care of your children if they’re orphaned.
  • Related to wills are trusts. Just like a will, a living trust spells out exactly your desires regarding to your assets, dependents and heirs. The big difference is that a will becomes effective only after you die and your will has been entered into probate. A living trust bypasses the costly and time-consuming process of probate, enabling your successor trustee (who fills basically the same role as an executor of a will) to carry out your instructions as documented in your living trust at your death, and also if you’re unable to manage your financial, healthcare, and legal affairs due to incapacity.

Review your beneficiary forms
Remember when you signed up for your company’s 401(k) plan, opened a bank account or an IRA? At the time you were asked to designate your beneficiary. Make sure you review those occasionally. If you don’t name a specific beneficiary, or if you designate your estate as the beneficiary, then the money in your accounts (IRAs in particular) may have to go through probate, which will cost your heirs time and money.

You should also make copies of your beneficiary forms and put them with your other important papers.

Consider life insurance
If you have young children, own a house or you may owe significant debts or estate tax when you die, life insurance may be a good idea to help offset lost income and unexpected costs.

Plan ahead
Create an annual recurring reminder on your calendar to review all of the information in your estate plan so that it’s always up to date with added or subtracted assets, accounts, advisors, heirs, and spouses. The Motley Fool estate-planning checklist provides a place to keep a comprehensive list of your accounts, assets and beneficiaries in one place that you can review annually.

Information for the post was gathered from The Motley Fool and Market Watch