Protect Estate Planning

How to Set Up an Estate Plan in 3 Easy Steps

Sara Gelsheimer  |  October 23, 2021

Estate planning documents aren’t just for the rich and famous — you should have them, too.

Estate planners know that everyone can benefit from setting up an estate plan, but many people still believe that anything to do with the word “estate” is reserved for those with yachts and mansions. Perhaps that’s why just 42% of adults in the U.S. have estate planning documents (such as wills and living trusts) set up.

Remember when the legendary Prince died without a will and no one knew what to do with his $200 million estate? His heirs are still dealing with the drama surrounding his assets, mostly because the courts and administrators haven’t decided the estate’s value and how it should be distributed. Although you might not leave hundreds of millions of dollars to your loved ones after you pass, it’s still critical to set up your estate plan if you haven’t already.

So what’s the purpose of making an estate plan, and why should you get around to it sooner rather than later?

An estate plan dictates where you want your assets — think cars, houses, bank accounts, and retirement accounts — to go after your death. Of course, your estate planning documents should include a will, which dictates guardianship of children and property, but it should also include other considerations, such as who should make financial or medical decisions if you are unable to do so.

Without an estate plan, you risk confusion and stress for your heirs (much like what happened after Prince passed). If people don’t know what to do with your assets, your estate will go to probate court, which costs money and makes your information public. With a thorough estate plan, you dictate what happens and stay in control of all your assets and information — making life much easier on your loved ones. And again, you don’t have to be an heiress to create one.

Three Steps to Set Up an Estate Plan:

Even when you realize how useful estate planning is, the process of organizing your estate plan probably still seems confusing. Who should have an estate plan, what is included in an estate plan, and when is the right time to set one up? These are questions that could stop you from getting started.

But setting goals for an estate is something everyone can do, and if you follow these steps, it doesn’t have to be scary:

1) Work with an attorney you trust

So who should have an estate plan? Anyone who has assets, and the best time to get started is now. To begin the process, you should work with a trusted attorney — a seasoned expert who can help you make sense of and execute the necessary estate planning documents. They can help determine your financial situation, and unlike an online template, they can work to understand your individual needs and wants. Your estate planning attorney can also work with your financial planner to map out your current saving and spending goals and determine what needs to be included in your estate plan.

Ask around to find an attorney you trust. Find people you know with similar jobs or outlooks on life, and see who they know. Talk to friends and family. Or check with the American Academy of Estate Planning Attorneys and the National Association of Estate Planners & Councils to find a trusted professional near you.

2) Make your plan — and include your family in the process

Creating your estate plan means making sure every asset has a place to go at your death. Set up beneficiary designations on retirement accounts and “transfer on death” and “payable on death” designations on bank accounts, cars, and so forth.

In addition to beneficiary designations, you need to create financial and medical powers of attorney and a living will. These documents will allow you to name someone to make financial and healthcare decisions if you are unable to do so. Finally, creating a revocable trust and putting assets in the name of that trust is another way to avoid probate; the benefit of creating a trust is that it allows you to be specific about how much your heirs can receive, and for what purposes. It can also add some protection if your heir inherits the assets inside of a trust.

Create a plan and talk to your loved ones about your goals for the future of your estate. This will not only help you solidify a plan for your assets, but will also create a foundation of openness that will help your family later if they need to communicate your wishes to others.

HerMoney CEO and founder Jean Chatzky recommends writing what she calls A Letter Of Instruction and Suggestion. Think of it as a road map to help those left behind sort out the details: names and contacts for the professionals who should be contacted, locations and numbers of accounts, insurance policies, how to find important papers, passwords and how to decipher them.  You can also use the letter as a way to express your wishes about precisely what should happen in the days after you die, who should handle what, who should speak, and who should be contacted. It’s a way to offer your loved ones one last gift as they work to honor your wishes during a difficult time.

3) Update your documents regularly

As you get older, your circumstances, goals, and means will change. So revisit your estate planning documents every two to five years to check that they still reflect your wishes. Maybe you decide to leave more or less to a specific heir or charity, or you want to change guardianship of a child. People sometimes think their will is a wax-sealed document signed in blood, but no estate planning document is ever final. Change your documents as often as your goals change — and as often as laws shift.

Don’t get spooked about the idea of creating an estate plan. It’s not just for the 1%, and it doesn’t have to be an overwhelming process. In fact, the purpose of making an estate plan is to give you more control and your family peace of mind in the future so you can work toward your goals and enjoy your assets in the present.


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