10 Essentials for a Comprehensive Estate Plan

 In Wills & Trusts

Article modified in July, 2023 – original publish date May, 2017.

While it’s nearly impossible to plan for every one of life’s contingencies, it is possible to create an effective and comprehensive estate plan. While good estate planning anticipates your death and disability, great estate planning reflects your chosen legacy.

Here are 10 timeless tips for creating an estate plan:

  1. Give power of attorney and health care proxy to someone you trust. For most of your life, you are far more likely to be temporarily incapacitated or disabled than you are to die. That’s why it’s a very good idea to give someone the power to act on your behalf in the event you are unable to make decisions for yourself.
  2. Carefully title your assets and designate beneficiaries for your assets, annuities, insurance policies and retirement plans. Keep in mind that anyone whose name appears on an account will have the authority to use funds on your behalf.
  3. Write a legal will that disposes of your assets and appoint legal guardians and trustees for your children to provide for their care, upbringing and education in addition to managing their inheritance.
  4. Take advantage of protections that are available, as a matter of right, by law to protect certain basic property rights. For example, some assets (e.g., 401(k)s, most IRAs and your primary residence) are protected by state law; therefore, they can’t be taken by a general creditor to satisfy your obligations.
  5. Use trusts to hold assets and settle your estate. Most people should eventually use a revocable living trust as the centerpiece of their estate plan. In addition, there are dozens of purposes for irrevocable trusts created for many favorable income, estate and gift tax results and, when used correctly, protection of assets.
  6. Instead of leaving inheritances directly for your children, use trusts. This can help you avoid claims against the inheritance from debts, divorce, disability and destructive spending habits.
  7. Seek professional advice from attorneys, bankers, financial planners and insurance brokers as you see fit — but be sure to test their knowledge, seek a second opinion and understand their fee structure before committing to an ongoing relationship. Bring family members who will assist you with your health care, finances and estate planning to meetings as needed to keep them in the loop.
  8. It’s never too early to start planning for your financial future. In order to be a good steward of your assets, find a good financial advisor with the help of family and friends (through referrals) and trusted professionals, such as your attorney or CPA.
  9. Don’t limit yourself; think outside the box. Take the time to identify the unique needs and goals of you and your family and the causes you care about so you can focus your plan around them.
  10. Effective estate planning is a lifelong activity. Laws, family circumstances, and the makeup of your own wealth will change over time, so it is critical to review and update your estate plan on a yearly basis.

If you follow these ten tips, your estate plan should remain in excellent shape. With the help of an experienced estate planning professional, you can protect your assets, anticipate incapacity, prepare to care for your loved ones  and settle the estate efficiently.

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