Quick Estate Planning Checklist

• What is Estate Planning?
• Importance of estate planning
• Avoiding probate
• Your Will
• “I am too young/old to be estate planning.”
• Getting Started Estate Planning
  • Step 1: Prepare a Will
  • Step 2: Draft a Power of Attorney
  • Step 3: Create an Advance Healthcare Directive
  • Step 4: Utilize Gifting
  • Step 5: Minimize Estate Taxes
  • Step 6: Leverage Trusts and Other Transfer Vehicles
  • Step 6: Leverage Trusts and Other Transfer Vehicles
• Estate Planning Check List

What is Estate Planning?

Estate planning is the process of preparing all your assets to be transferred upon death. The typical assets people have are homes, cars, property, brokerage, bank accounts, insurance, retirement accounts, business interests and more. The most important document in estate planning is your will.

The process of estate planning typically involves a financial advisor, lawyers, accountants, life insurance advisors, bank, and broker. Now, we know that’s a lot of people, but your estate is your whole life, and that’s many bells and whistles that need to be taken care of. We also know you may have many questions so let us begin to break those down.

Importance of estate planning

Think of estate planning as drafting the story to leave your children, grandchildren, and great grandchildren. Pay homage to your hard work throughout your life to promote generational wealth for your family.

Through estate planning, if anything were to happen to you, an effective estate plan will make sure your wishes are carried out. It can also protect your loved ones from unnecessary taxes or difficult decisions.

You want to plan how your assets are being divided or else you risk a probate occurring.

Not convinced? Here’s why you need an estate strategy.

Avoiding probate

We advise everyone to avoid probate. (What is probate anyway?) A probate is the legal process that finishes a person’s legal and financial affairs after their death. In New Jersey, probate matters are managed by two courts, the Surrogate's Court and the Superior Court, Chancery Division, Probate Part.

A probate is not only unfortunate for many families due to lack of control, but it is costly and can take months or years.

How do you avoid probate? Estate Planning! Planning how your assets will be divided and writing a will avoid probate.

Here’s the critical estate documents you need.

Your Will

Like we said, a will is a very important part of estate planning and avoiding probate. It is arguable to be one of the most important documents you’ll make in your life.

A will outlines instructions on how to handle difficult decisions regarding your estate.

According to Caring.com and AARP we see the following statistics regarding estate planning by age:

• 24% of 18- to 34-year-olds have a will.
• 27% of 25- to 54-year-olds have a will.
• 45% of people over the age of 55 have a will.
• 81% of people over the age of 72 have a will.

This raises an important question: why not start early? A will can be modified to meet your circumstances as they change, but a layer of protection is helpful at all stages of life.  

We cannot mention a will without pointing out the sheer surrealness of it all. That is a big, dotted line to sign (not actually), but it is simply protection for you. It will benefit you and your family in the long run.

“I am too young/old to be estate planning.”

From our experience, people tend to hold off on writing their wills and estate planning. We see many people claim they are too young or too old but that is wrong, here is why: You can draft a will at any age. It is always best to stay on top of your estate plan and not hold off till the last minute. Moral of the story: Do not procrastinate! 63% of people who make more than $80,000 per year cite procrastination as the primary reason for putting off estate planning.

Getting Started Estate Planning

So, we just broke down the basics of what, why, and when of estate planning, but what about the how? Don’t worry, we will go through that too!

Even if you already have an estate plan, it is important to ensure that it reflects your current circumstances. You can read through the next section: ‘Estate Planning Check List’ to see if you are missing anything.

Step 1: Prepare a Will

As mentioned before, a will is a very important part of estate planning, hence it being step 1!

Engaging an estate planning attorney will help ensure that your will is legally sound and reflects your goals and valid under your state’s law.

Step 2: Draft a Power of Attorney

Drafting the Power of Attorney (POA) is vital! This document appoints a trusted agent to make financial and legal decisions in the event you can’t make these decisions yourself. You’ll be required to assign the scope and strength of their powers.

Step 3: Create an Advance Healthcare Directive

Advance healthcare directives are also legal planning documents that are an important piece of the estate planning process. These directives are written instructions about your medical care and wishes if you can no longer make your own decisions or communicate your preferences. They also legally designate someone else to make additional healthcare decisions for you when you are unable to do so.

Along these same lines, you might also want to leave written instructions for your funeral or memorial service. This just makes it a little bit easier for your loved ones.

Step 4: Utilize Gifting

Including gifting into your estate plans has different advantages. It allows you to express your philanthropic and financial values, for one. It can also provide a way to reduce estate taxes while staying within estate tax laws. Estate gifting allows you to strategically transfer portions of your estate to your heirs and beneficiaries during your lifetime. Gifting certain assets or amounts early can qualify for a gift tax exclusion.

Other estate gifting options may be suitable for you as well, such as a Charitable Remainder Trust. This strategy could enable you to defer capital gains taxes on high-value assets, while also providing an immediate charitable income tax deduction and a potential increase in your income. Not all gifting strategies are right for everyone, so be sure to consult a professional.

Step 5: Minimize Estate Taxes

One of the main advantages of estate planning is that you can structure the transfer of wealth to lower the impact of taxes on your legacy. By employing strategic measures such as that of strategic gifting outlined above, establishing trusts and leveraging other applicable tax exemptions, you can potentially reduce the tax burden on your estate.

Step 6: Leverage Trusts and Other Transfer Vehicles

Trusts are a common legal mechanism for outlining money or property that will be transferred or managed for named beneficiaries. It is important to note there are many different types of trusts. For example, living trusts are managed by a trustee (you) and upon your death these assets are transferred, much like a will.

Step 7: Incorporate Professional Help

A very important step of estate planning is looking for professional help. Always feel free to call one of our advisors to help answer any questions you have or to point you in the direction of lawyers, accountants, brokers, bankers, etc. We understand that thinking about your legacy is a big thought, but you don’t have to do it alone!

Estate Planning Checklist

Now, we are sure you already have an estate plan, and you haven’t procrastinated… *Wink wink*… But even if you don’t, this checklist is a good measure to make sure you have everything you need. In case you don’t, you can always refer to this blog or of course, give us a call!

Do you have a Will?

Do you have healthcare documents in place?

Do you have financial documents in place?

Have you filled out beneficiary forms?

Do you have the right amount and type of life insurance?

Have you taken steps to manage your federal estate tax?

Have you taken steps to protect your business?

Have you created a letter of instruction?

Will your heirs be able to locate your critical documents?

Some critical documents you may need: 

• Your will
• Trust documents
• Life insurance policies
• Deeds to any real estate, and certificates for stocks, bonds, annuities
• Information on your financial accounts and safe deposit boxes
• Information on your retirement plans
• Information on any debts you have like credit cards, mortgages, and loans

Once again, we leave you with this: Start planning today. Start taking some proactive measures to safeguard your legacy and plan for your family’s financial future. Schedule some time to discuss these details and strategies with your trusted legal and financial estate planning professionals.