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What Are 7 Steps in the Estate Planning Process?

Biggest problem in will drafting

Tackling Estate Planning Via Seven Steps

It’s never too early or late to plan for your estate. If you’re considering the future and the legacy you want to leave for loved ones, now is a great time to start the process. Strong estate planning has numerous benefits, including:

  • Reducing the burden of income and estate taxes on yourself and your loved ones
  • Ensuring you have a valid will so no one is confused about how you want your assets divided among heirs
  • Managing, minimizing, or avoiding probate
  • Protecting yourself and your assets with trusts and power of attorney forms
  • Protecting loved ones with guardianships or conservatorships

One reason people might shy away from starting the estate planning process is that they aren’t sure where to start or what to expect. The seven steps below help you understand what is involved in basic estate planning. An experienced estate planning attorney can help you with more complex matters.

1. Create an Asset Inventory

Start by ensuring you understand what belongings and assets you have to pass on to someone else in the event you pass away. An asset inventory also provides you with an understanding of your current situation so you can make educated decisions about protecting your assets in the future, which can also be part of estate planning.

belongings and assets

Your asset inventory should include:

  • All high-value and sentimental assets—pretty much anything you want to protect or specifically pass to certain heirs
  • Your cash and cash-equivalent assets, including checking and savings accounts, retirement plans, and investment accounts
  • Any property that you own a share or partial interest in

2. Consider the Needs of Dependents, Family, and Heirs

Think about your current family situation. Do you have people who depend on you as the breadwinner or to provide care of any type? Where, currently, in life are your heirs? Where will they be in the next few years? These questions are important for estate planning.

Someone with minor children may want to consider guardianships and trusts while someone with a college-age child might want to set up a trust to help cover educational expenses. If all your heirs are independent, your considerations may lean toward the fair distribution of assets or how best to leave a personal legacy.

3. Determine Beneficiaries

Make a list of all your beneficiaries. This can include close relatives, including spouses, children, and grandchildren. But you might also have assets you want to leave to close friends or business partners.

When possible, think about beneficiaries in relation to specific assets. For example, you may want to ensure the money in your checking account is transferred to your spouse as soon as possible if you pass away.

4. Define How the Estate Should Be Divided Among Beneficiaries

Determine how you want to split your estate among heirs. You may want everything divided equally among your adult children, for example. Or perhaps you want your spouse to get 50 percent of the estate and your adult children to split the rest. In some cases, people get fairly specific, naming certain assets and who they might go to.

estate lawyers

While you can’t generally fly in the face of state estate laws, you do have a lot of flexibility in how your assets are distributed to loved ones. Take time to discuss your preferences with an estate lawyer to find out how to make them a reality in the future.

5. Organize the Paperwork

Once you decide how you want to handle your estate plans, it’s time to put everything in writing. You’ll need to create or complete various paperwork. Some of the tools that are used during this process include:

  • Beneficiary forms, which allow payable-on-death accounts to transfer to the right people
  • A will, which dictates your wishes for your assets upon your death
  • Powers of attorney forms that can protect your interests while you’re still alive
  • Trusts, which can help protect assets and support the transfer of assets to beneficiaries without going through probate

This is far from a comprehensive list of the paperwork involved in estate planning. Talking to a lawyer experienced in trust and estate planning and administration can help you understand what might be needed in your situation.

6. Set Follow Ups to Review Estate Plans Periodically

Estate planning is not a set-and-forget activity. You should review your estate plans periodically, such as annually, to ensure they still reflect your wishes, your assets, and the needs of your family. Families change and grow. Wealth changes over time. How you feel about certain heirs or who might be best positioned to shepherd certain assets can also evolve.

update your will

When handled correctly, estate planning doesn’t lock you into decisions for the rest of your life. You can update your will, create a new trust, or otherwise make changes to estate plans.

7. Seek Out an Experienced Estate Planning Attorney

This list of the seven steps of estate planning is fairly basic in nature. It’s meant to give you an idea of the type of thoughts and work that go into the process. It isn’t a step-by-step guide, because estate planning can be complex and the right steps are always dictated by the specific factors of the situation.

If you’re ready to start your estate planning journey, reach out to the Stone Arch Law Office for help. Our team can work with you to understand what your goals and needs are and help you create a strong estate plan. Give us a call at 612-682-0294 to schedule an appointment.

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