1. DEFINE YOUR GOALS
What do you want to happen to your assets in the event of your death or disability? If your beneficiaries predecease you, who are your alternate selections? How will your assets be distributed, and when will these distributions take place? Decisions on distribution of your estate assets should take into account the size of the estate, the ages and abilities of your children, and your personal desires. For example, a distribution to children over time might consist of 10 percent of the estate at age 18, 25 percent at age 21, 50 percent at age 24 or upon completion of college, and the balance at age 30.
To get the benefits of the trust, certain details must be attended to, and this is the job of your appointees. For example, leaving a trust for the surviving spouse requires that the trust be funded properly and in a timely manner at the first death, or major tax benefits can be lost. Is estate privacy an issue for you? Do you want your estate to be public record upon your death? Do you have any special gifts you want made to charity? Do you want an elderly parent or friend to be financially cared for? All of these circumstances should be noted in your plan.
2. GATHER & ORGANIZE YOUR DATA
There are three basic tasks to be accomplished:
- Review and update your financial position.
- Review how you hold title to your assets. Is it consistent with your estate plan?
- Review your beneficiary selections. Are they aligned with your estate plans?
Did you know that how you hold title to assets has a higher legal priority than your will? For example, if you and your best friend held title to an investment club account as joint tenants and you died, the property would revert to your friend even though you had willed your interest to your spouse.
3. ANALYZE YOUR SITUATION
Start by determining your current net worth, assuming your death occurred today. This can be done by totaling your current assets and liabilities, and adding the value of any life insurance. Try sketching a picture or flow chart of your existing estate plan. Review your appointees:
- Guardian of the Person/of the Property
- Power of Attorney – Property Management
- Advance Health-Care Directive or Health-Care Power of Attorney
4. DEVELOP YOUR STRATEGIES
With the assistance of your estate planning advisor(s), identify the legal documents that need drafting or make any necessary adjustments to existing documents. Determine any other actions that must be taken for your wishes to be carried out.
5. IMPLEMENT YOUR PLAN
Do what needs to be done — i.e., create new wills, trusts and powers of attorney, adjust title to your properties, change alternate beneficiaries of retirement plans and life insurance policies to trusts.
6. TRACK & MONITOR YOUR PROGRESS
Check your estate plan annually or any time there are changes in your family situation or net worth. Use your financial planning calendar to schedule your next review.