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Estate Planning: A To-Do List to Get You Started

In my work as a professional fiduciary and financial planner, I have seen the chaos and heartbreak families can suffer when a loved one dies without an estate plan. Tightly knit families get torn apart by fights over assets. Courts get involved in drawn-out processes that leave heirs exhausted. And estates get reduced by federal and state taxes that could have been minimized.

The tragedy is, with an estate plan, the court involvement, excessive taxes and family fighting might have been prevented. Whether you have very little in assets or a highly complicated estate, a plan is essential.

Here are my five tips for your estate plan:

Get Started on Your Estate Plan Today 

It’s a sad fact that half of Americans do not have even the most basic estate planning documents, such as a will or living will. You may be procrastinating because, like many people, considering your mortality might make you uncomfortable. Or maybe you are busy with your career and family. Regardless, the best way to ensure your wishes are carried out in the manner you would like is to formalize those wishes.

Keep Your Estate Plan up to Date

Estate planning is not a “one and done” project. Changes in your life or the life of your heirs may necessitate changes in your plan. Births, deaths, marriages, divorces—these milestones can affect your estate documents. I recommend you review your plan at least annually and whenever you or your heirs experience a life change. In your review, make sure to include accounts that list beneficiaries, including retirement and brokerage accounts, life insurance policies and bank accounts. (For related reading, see: An Estate Planning Must: Update Your Beneficiaries.)

Make Plans for Your Business

If you are a business owner, then you should decide sooner rather than later what you want for your business after you are gone. You will probably need the time to lay the groundwork for your plans, whether they entail selling your company or leaving it to your children. You will also want to consider the financial and emotional impact your plan can have on your heirs. For example, if you leave your company to one child but not another, you will likely want to address what you can do to make sure the inheritance is equitable for both. (For related reading, see: Top Exit Strategy Tips for Small Businesses.)

Take Care of You While You Are Living 

Your estate plan should incorporate more than just the inheritance you pass on. It should include your wishes for your well-being while you are alive. You should draw up powers of attorney to designate who will manage your finances and health care should you become unable to do so. You should also prepare an advance directive stating your wishes for medical care or end-of-life decisions should you become unable to make those decisions on your own.

Hire a Professional

There is no shortage of DIY legal documents you can download on the internet. However, I encourage you to speak to a professional who can analyze your overall situation and recommend the legal structures and documents that can help pass on your estate efficiently and according to your wishes. An estate planning attorney can provide the expertise to make sure your documents are legally drafted and administered, and a financial advisor can help you see how your estate plan fits into your overall finances and investments. (For related reading, see: Top 3 Tips to Find an Estate Planning Lawyer.)

Don’t Put off Your Peace of Mind

With half of Americans without a plan, you can imagine the immense trauma that families are experiencing when their loved one passes. The tragedy is that much of this trauma is avoidable.

By drawing up an estate plan and updating it periodically, you can help relieve your family’s burden during a time of grief while providing yourself peace of mind that your wishes for the legacy you built will be carried out in the way you would have liked.

(For related reading, see: Getting Started on Your Estate Plan.)