Many people understand the importance of having an estate plan but often delay because they’re unsure how to start. Tackling something unfamiliar can feel daunting, but here are six straightforward steps to help you get started on creating your estate plan.
Step 1: Assess Your Assets
Although estimating the future value of your assets isn’t an exact science, you can still make a reasonable projection about what you’ll pass on to your loved ones. Start by identifying the property, investments, and other assets that will make up your estate, and consider whether any might need to be liquidated.
For instance, if you own a collection of valuable items—such as rare books—but your children aren’t interested in or aware of their worth, you might want to liquidate them yourself. This way, you can ensure fair value and distribution. Assess your belongings through this lens as you begin building your estate plan.
Step 2: Define Your Goals
You don’t have to divide your assets equally among your heirs or beneficiaries. If someone in your family is not financially responsible, you can include provisions that protect their inheritance from being mismanaged. Trusts, for example, can be set up to control how and when assets are distributed.
If you want to protect your heirs from losing their inheritance to lawsuits, divorces, or other claims, you can establish asset protection for them in your living trust. A supplemental needs trust can provide for a loved one with a disability without affecting their eligibility for government benefits. Understanding your personal goals helps tailor your estate plan to your unique needs.
Step 3: Consider Legacy Planning
Estate planning isn’t just about finances; it’s also an opportunity to leave a lasting legacy. A meaningful way to do this is by writing a letter that you keep with your comprehensive estate plan where you share your values, life lessons, and hopes for future generations. This document can be passed down for centuries and is an opportunity to offer guidance, moral beliefs, or spiritual reflections.
You can also designate specific heirlooms to certain family members and capture family stories or memoirs. By doing this, you leave more than just material wealth; you share a piece of yourself and your history.
Step 4: Plan for Digital Assets
In today’s digital world, estate planning also involves managing your online presence. Digital assets, including everything from social media accounts to online banking and domain names, are part of your financial and personal identity. Digital estate planning ensures these assets are handled according to your wishes.
Securing your digital legacy protects your accounts from identity theft and ensures sentimental items like photos or financially valuable assets like monetized websites are properly managed. For business owners, it also ensures the continuity of digital operations and protects the business’s future.
Step 5: Address Incapacity Planning
Estate planning isn’t just about what happens after you’re gone. It’s also about preparing for the possibility that you may one day be unable to manage your affairs due to illness or cognitive decline.
To avoid the need for a court-appointed conservatorship, you can incorporate incapacity planning into your estate strategy. This can include creating advance health care directives, such as a living will that outlines your preferences for life support and medical treatment. You can also appoint someone to make medical decisions on your behalf by establishing a durable power of attorney for health care. Be sure to include a HIPAA release so your chosen representative can access your medical records.
On the financial side, you can assign someone to manage your finances through a durable power of attorney for property or appoint an incapacity trustee for your living trust if the need arises.
Step 6: Get Professional Guidance
If you’re ready to start planning your estate but feel unsure about the details, seeking professional advice is a great next step. An experienced estate planning attorney can help you navigate these decisions and ensure your plan is comprehensive.
You can also gain valuable insight by attending a free estate planning workshop. These sessions cover everything from asset protection to navigating nursing home costs, providing a wealth of information to help you make informed decisions. Check our event schedule to find an upcoming workshop that fits your needs.
By following these six steps, you’ll have a strong foundation for building an estate plan that protects your legacy and provides for your loved ones, both financially and emotionally.
