How To Estate Plan


Estate planning sounds like a cumbersome process, but it doesn’t need to be. Massive estates can be complex to plan for, but for the vast majority of Americans it can be fairly simple. Regardless of the size of your estate, here is how you can craft an estate plan in 10 easy steps.

However, even if you plan on organizing your own estate, we still recommend meeting with an estate planning attorney to finalize everything.

1. Organize Your Digital Estate

Digital assets are often overlooked, but they are becoming a major aspect of the modern estate. Compile a list of valuable digital assets such as virtual currencies, personal or professional blogs, domain names, and copyrighted works such as music, videos, photos, writing, and computer code. If any of these assets are entitled to ongoing royalties, be sure to assign these assets to someone who can manage and maintain the revenue stream. Next, document items with sentimental value, including family photos and videos, and certain data saved on hard drives or in the cloud. Finally, leave arrangements that will allow a trusted individual to access your online accounts. You can use a secure password management system to store usernames and passwords, or you can write them down on paper. If you choose the latter, be sure to save the document in a secure place to protect your identity, and update the document periodically when you change login credentials.

2. Create a Living Will

A living will, also known as an advance healthcare directive, is meant to inform doctors of your healthcare preferences. Should you become incapacitated and are unable to communicate important decisions regarding your treatment, your living will can speak to your intentions. You can broadly authorize doctors to utilize any treatment to save and prolong your life, you can indicate if you wish to be allowed a natural death, and you can address specific topics such as palliative care (treatments for pain and suffering) or artificial life support. Even if your family and friends disagree with the choice of treatment, your doctors will be bound to the instructions in your living will.

Note that this document is separate from your last will and testament. A living will dictates medical treatment during your lifetime, while a last will and testament instructs how your assets should be distributed when you die.

3. Issue a Durable Power of Attorney

If you are ever incapacitated, you’ll also need someone to handle your affairs when you are unable to do so yourself. A durable power of attorney can grant someone the authority to access your financial accounts, pay bills, and enter into contracts or other dealings on your behalf. You can also issue a healthcare power of attorney if you’d like an advocate to speak for you regarding important medical decisions. Your healthcare advocate would be bound by the instructions in your living will, but would have the discretion to make decisions within those parameters.

4. Plan for Your Funeral and Burial Arrangements

Many people include their funeral and burial requests in their will. While this practice is acceptable, it’s wise to also include your plans in a separate letter of instruction. If your will isn’t opened until after your funeral (which is quite common), a letter of instruction left with a loved one or trusted advisor would make your intentions clear in time for the services. You can also purchase pre-need services from the cemetery or crematorium if you’d like to take care of the arrangements yourself ahead of time.

5. Take Inventory of Your Assets

Start by adding up your liquid assets. This includes bank accounts, brokerage accounts, CDs, retirement accounts, and precious metals (gold, silver, etc.). These assets should be easy to value with the most recent statement. Next, walk through your house and note any assets worth more than $100. Look for televisions, computers, jewelry, collectibles, furniture, guns, and power tools, to name a few. Finally, make a list of your major assets like the house, cars, boats, and recreational vehicles. It helps to have an estimate of the value for these items, but it’s not necessary to get that professionally appraise; an approximation will do just fine for now.

6. Gather Your Liabilities

Compile a list of your debts. Include credit cards (both with and without a balance), mortgages, auto loans, home equity lines of credit, student loans, and other personal loans or debt. While you’re doing this, it helps to request a copy of your credit report to check for any accounts that have slipped between the cracks over the years.

7. Nominate an Executor

An executor will serve as your personal representative when you die. This individual will value your assets, pay your debts, and distribute assets to your heirs. They will have a significant measure of authority, so choose the person for this role carefully. Many people default to relying on their spouse, but that may not always be the best scenario. No matter who you choose, it’s wise to nominate a backup executor in case your primary executor dies before you, or s otherwise unable to fulfill the obligation.

8. Designate Your Beneficiaries

Before you choose who will actually receive an inheritance from you, make a list of any would-be heirs. This will include people who may feel entitled to an inheritance, including direct family, extended family, and even business partners. Next, whittle the list down to the people who you’d like to gift assets to. These people will be called your beneficiaries. Be sure to also include any organizations or charities to which you’d like to make donations, as they can be beneficiaries to your estate, too.

9. Draft a Last Will and Testament to Distribute Your Assets Through Probate

Now that you have an executor, an accounting of your assets and liabilities, and a list of your beneficiaries, it’s time to formalize these in your last will and testament. It’s always best to do this with the help of an attorney, but not necessarily required. When the document is complete, sign and date the will in the presence of a notary public. You’ll also need 2 – 3 witnesses to sign the will, and testify that you were over 18, of sound mind, and not under duress at the time was written.

10. Prepare a Plan to Transfer Assets Outside of Probate

There are a handful of assets that are designed to transfer to your beneficiaries without going through probate court. As long as you and your estate are not listed as the beneficiary, these items do not need to be included in your will, and will pass to your beneficiaries automatically when you die. This includes:

  • Bank and brokerage accounts with a transfer-on-death (TOD) or payable-on-death beneficiary
  • Retirement accounts (401k, IRA, etc.)
  • Life insurance policies
  • Property held in joint tenancy or as tenants by the entirety
  • Assets held in a trust

If possible, it’s best to craft your estate plan with the help of an estate planning attorney. An experienced attorney can ensure there are no mistakes in the estate planning documents, and they can help you to avoid some of the pitfalls and missteps that they’ve witnessed over the years. It’s also a good idea to review your estate plan regularly, and update the documents after major life events.

For long-term peace of mind, contact us to set up a consultation today. We look forward to helping with your will and other estate planning needs.

Call our Arizona Estate Planning team at (480)467-4325 to discuss your case today.

Contact The JacksonWhite Estate Team

Call (480) 467-4325 or fill out the form below to schedule a consultation and discuss your best legal options.

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