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7 Must Have Estate Planning Steps

Many years ago,  I spoke with a woman who wanted to talk about setting up an estate plan for her and her husband.

Bear in mind, I am not an attorney so I am unable to draft estate planning documents.  However, I do try to help my clients determine what is important to them and their families so the attorney has a better understanding.

This woman seemed really anxious to get things done, so at first, I thought maybe there was a serious health issue and time was of the essence. (like some of the Dana Farber patients I've talked to over the years).  Check out this article to learn more HERE

Come to find out, she had gone through a situation many years before that really changed how her parents had intended for their family home.

Her dad passed away when she was in her 30's and her mom took sole possession of the vacation home that had been in her family for three generations.

Her mom then got remarried to a very nice man and a few years later, her mom passed away.  Since her mom did not do any specific estate planning, the vacation home then passed to her step dad.

A few months later, her step dad passed away and the vacation home, that had been in her family for decades, now passed to her two step sisters. (who she really didn't have a great relationship with).  Needless to say, this woman and her sister were disinherited from this property.

Was this intentional?  Hardly.  It is a great point on the importance of doing proper estate planning.  Especially, when second marriages are involved.

If her mom had simply put this house in a trust with her daughters named as beneficiaries, this could have all been avoided.

So, now you see the importance of estate planning, but sometimes it’s a question of where to start. No matter how "rich" you think you are (or not), you need a plan set in place that can help your heirs understand your final wishes and distribute your estate properly. As you prepare to discuss this with your financial advisor, here are a few tips and considerations to keep in mind.

Step #1 Name a Personal Representative or an Executor

After your passing, you’ll want to have somebody in place who can execute your wishes. This person is aptly named an executor or personal representative.  

Many people choose a spouse, sibling, child or close friend as executor. In most cases, the job is fairly straightforward. Still, you might give special consideration to someone who is well organized and capable of handling financial matters. Someone who is respected by your heirs and a good communicator also may help make the process run smoothly.

Above all, an executor should be someone trustworthy, since this person will have a legal responsibility to manage your money, pay your debts (including taxes) and distribute your assets to your beneficiaries as stated in your will.

If your estate is very large or you anticipate a significant amount of court time for your executor, you might think of naming a bank, lawyer or financial professional. These individuals will typically charge a fee, which would be paid by the estate. In some families, singling out one child or sibling as executor could be construed as favoritism, so naming an outside party may be a good alternative.

Step #2  Understand Estate Taxes

Tax planning should be an integral part of your estate planning strategy. You’ll want to work with a tax professional who can help you navigate state inheritance laws and federal estate taxes. The 2017 Tax Cuts and Jobs Act raised the federal estate tax significantly, making it easier for families to maintain their estate when transferring to loved ones. Estates with combined gross assets under $11,700,000 (for individuals) are not required to file a federal  estate tax return.1   Depending on your state, a state estate tax return might need to be filed and taxes owed. 

There are ways to minimize these taxes and if interested, I'm happy to discuss.

Step #3  Prepare Your Health Care Documents

Healthcare documents spell out your wishes for health care if you become unable to make medical decisions for yourself. They also authorize a person to make decisions on your behalf if that should prove necessary.

These documents may include:

  • Living will
  • Power of attorney agreement
  • Durable power of attorney agreement for healthcare or healthcare proxy

Step #4 Confirm Beneficiaries on all accounts and life insurance

When was the last time you checked your beneficiaries on things like retirement plans, life insurance, annuities and other accounts?

Probably not recently and yet, a mistake here can upset your whole estate plan.  Why?  Because many times a beneficiary designation supersedes one's wishes in their Will.  Left everything in your Will to your sister but named your ex husband on your IRA?  Your ex could end up with your IRA.  Probably not what you would like to happen.  Here at FPS, we spend a fair amount of time checking these various beneficiaries (and then reviewing them with you over time) to make sure they are correct.

It is imperative that these beneficiaries align with your wishes as it could leave a real mess behind, cause delays, and worse case, not ensure your wishes will be carried out.

Step #5  Write a Letter of Intent

A letter of intent is a non-legal document that outlines your wishes. A strong, well-written letter may save your heirs time, effort and expense as they administer your estate. It acts as a message from the deceased and can include an array of information from providing organization and outlining last wishes, to detailing information and sending personal messages. Consider including instructions for your funeral arrangements and other details that are important to you.

Step #6  Organize Your Documents

After your passing, you’ll want your heirs and executor to be able to easily obtain and access important documents. 

These documents may include:

  • Your will
  • Trust documents
  • Life insurance policies
  • Deeds to any real estate, and certificates for stocks, bonds, annuities
  • Information on your financial accounts and safe deposit boxes
  • Information on your retirement plans
  • Information on any debts you have: credit cards, mortgages and loans
  • Password and log in info for various accounts

Step #7  Talk to Your Family

Do you have stepchildren and ex-spouses? Have you been caring for any foster children? Have you been caring for a grandchild, niece or nephew? With the help of a financial planner and an attorney, you can structure a will or trust that accounts for everyone you wish to provide for. The more clear and specific you can be the better, as you will reduce the amount of confusion among your family.

There are many factors to consider when creating a will or trust. Before diving into the estate planning process, you should consult with a seasoned financial professional and estate planning lawyer. They will help you make sure you’ve covered all the bases when working to plan for your passing.

Any questions, we are here to help.

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All the best.

Rick Fingerman, CFP®, CDFA™, CCPS®



Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.

  1. https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax

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