A Step-by-Step Guide to Building an Estate Plan

iQuanti: A great estate plan serves several purposes. It provides direction for financial and healthcare decisions while you're still alive, distributes assets after you pass, and ensures your wishes are handled both during your final months or years and after you're gone. To put it simply, an estate plan is kind of a big deal. If you're ready to build yours, here's a step-by-step guide to getting started. 

Decide if You Want or Need Help  

Estate planning is a necessary but sometimes burdensome process. Before you begin, it's best to determine if you want or need the help of an estate attorney or tax professional. You may be fine to use an out-of-the-box will program or online tool for less complex estates. But those who have a more complicated family, business, or financial situation may feel overwhelmed and find peace of mind in working with a professional.  

Organize Your Assets  

You know how the easiest way to re-arrange a closet is to dump everything out on the floor, then put back only what's needed? Organizing assets to include in your estate plan is very much the same. 

First, you'll create a list of everything you own. That includes financial assets like a whole life insurance policy, taxable brokerage account, or 401(k). But you'll also include things like jewelry, furniture, or vehicles. Then, you'll begin the arduous process of figuring out how to divvy up those assets amongst loved ones. Whatever you decide will ultimately be documented in your will, which we'll dive into below. 

Fill Out the Right Documents  

There are several critical pieces everyone needs in their estate plan, including:  

  • Power of Attorney: You'll need to designate someone as a financial power of attorney who will be responsible for making financial decisions on your behalf if you become incapacitated. 
  • Advanced Healthcare Directive: The advanced care directive establishes your wishes for end-of-life medical care. As part of this document, or in addition to it, you may also need to complete a healthcare power of attorney that empowers someone to make decisions if you're no longer able. 
  • Will: Your will identifies how your assets will be distributed and to whom. It can also document your final wishes, like where you want to be buried and what kind of funeral service you want, as well as establishing wishes for the care of minor children. Along with creating a will, you'll need to name an executor who will handle settling any debts and dividing the estate based on your wishes. 

Assign Your Beneficiaries  

In addition to creating your will, it's important to also keep beneficiary designations up-to-date on accounts. Keep in mind that any beneficiaries assigned on specific accounts, like a life insurance policy, will typically override what's outlined in your will. That means old beneficiaries on accounts, like an ex-spouse or estranged child, could end up benefiting against your wishes. 

Set a Regular Review  

An estate plan evolves as life changes. That means it's critical to set a cadence for regular reviews. Often, once or twice a year is often sufficient to ensure everything is updated. But a significant life event like the birth of a child or divorce could call for a one-off update.  

The Bottom Line  

An estate plan serves as the blueprint from which loved ones take direction if you're ill or pass away. That means it's critical to have an estate plan and keep it updated. Keep in mind that seeking professional help to organize an estate plan is an excellent choice for those who need direction or have more complex estates. Taking time to create the perfect estate plan helps ensure there won't be any gaps and your legacy will be exactly what you want. 

Source: iQuanti, Inc.