What Is Estate Planning? 7 Steps to Consider

We all have a responsibility to plan for what happens to our money after we die. Estate planning can save your loved ones plenty of trouble after you’ve passed, make clear your personal wishes, and give you certainty at the end of your life. 

By the way, the word “estate” makes me think of the Monopoly Man or a super-wealthy figurehead! But on the contrary, “estate” simply means the assets you’ve collected throughout your life - no matter how large or small. 

Estate planning is also something that is key to review with your parents or grandparents, if they don’t have their matters in order. While it can be a difficult discussion, now, it makes carrying out their wishes far easier, later. You don’t want to be left guessing about what they may have wanted! That’s why estate planning is important for you, no matter your age, as well as those in the generations above you. 

In today’s blog, we’re going to cover a basic checklist of the things you (and your loved ones) should consider, in order to have a complete estate plan in place.  

Please note that while I am not a legal expert, I can certainly recommend trusted local professionals who can assist you or your loved ones through the legal steps of this planning process.

Step 1: Asset Inventory

Many clients are not even sure where to start, and at times, this lack of clarity can lead to procrastination. So, let’s start at the beginning. One of the first things you can do to start estate planning is to create an Asset Inventory.

An asset inventory is a detailed list of all assets, including real estate, bank accounts, investments, and personal property, that you own. If you are a client of Gretchen Rehm Financial, I would be happy to help collect the financial data necessary to get the ball rolling for you. 

Step 2: Last Will and Testament

This is probably what you think of first when you hear “estate planning”! Your will is a key part of your plan. 

Take your list of assets and decide who will be the beneficiary(ies)  of each. A will allows you to distribute any assets you have after your death and appoint an executor of your estate (the one who will carry out the will’s directives). If you have minor children, you can also appoint guardians for them.

Step 3: Trusts

Another common component of estate planning is creating a Trust. Trusts are legal arrangements that allow a third party (trustee) to manage assets on behalf of beneficiaries. Trusts can help avoid probate, can provide tax benefits, and may offer more control over asset distribution.

Trusts are an often-used method for leaving large sums of money or property to a minor child. While the child can benefit from its holdings prior to becoming an adult, the funds will be kept safe until such a time they are deemed ready (as outlined in said trust) to handle the matters themselves.  

Step 4: Power of Attorney

A power of attorney (POA) can be another feature of estate planning. It is a legal document that grants someone the authority to make financial or legal decisions on behalf of the individual if they become unable to do so.

Should you require a level of care that renders you unable to make choices for your own assets, life, or dependents, a person as appointed by the POA will juggle those for you.

Step 5: Healthcare Directive (A Living Will)

Your healthcare directive, also often called a “living will,” specifies your wishes regarding medical treatment and interventions in the event of incapacitation. It may also designate a healthcare proxy to make decisions.

Step 6: Beneficiary Designations

Probably one of the most important factors in your estate planning is who will receive your assets.This person, who will “benefit” from the proceeds, is called a “beneficiary” in estate planning. Such designations ensure that savings, like retirement accounts and life insurance policies, are distributed according to your wishes by naming specific beneficiaries.

If you are a client with our office, I can help you get retirement account beneficiaries clearly outlined, including the names and distribution amounts/percentages. If you hold a life insurance policy with our office, those members of our team can assist you with the policy beneficiaries. 

Step 7: Funeral Arrangements

Within your estate plan, you can also dictate your own funeral arrangements. In this preparation, you can outline preferences for funeral or memorial services, body disposition, and other post-mortem wishes.

The goal of estate planning is to ensure that your assets are transferred according to your wishes and making sure your loved ones are taken care of in the event of your passing. Give my office a call to get an easy start, and we can work together to help ease the difficulties of these tough decisions!