Creating an Estate Plan can seem like a daunting task—it is uncomfortable to make plans for your own death, and it can seem overwhelming to address every aspect and plan for every contingency. However, once a plan is in place, it should be a relief to know your goals are protected. And with the guidance of an Estate Planning Attorney, the process is less intimidating. Regardless of the size, value, or complexity of your Estate, you should have an Estate Plan. Proper planning ensures that your wishes are accurately honored and your property passes to the individuals and organizations of your choice.
Getting Started with Estate Planning
- Start by listing all of your assets.
It may help to think in terms of categories: real property, investment property, business ownership interests, IRA accounts, bank accounts, life insurance policies, annuities, etc. Assign an estimated value to each item. Also list how each asset is titled – do you own this property individually, or with someone else? This list will help your Attorney determine the total value of your Estate and any tax implications that may exist.
- Gather beneficiary designations. Some accounts like IRAs, life insurance policies, annuities, or bank accounts pass upon your death not by your Estate Plan, but by a designated beneficiary listed specifically for that asset. Obtain copies of your current beneficiary designations from the financial institution or insurance company. It is particularly important to review these designations when creating or changing your Estate Plan to ensure your assets pass according to your wishes.
- Know generally what your goals are and who you want to leave property to. List the goals you want to accomplish in your Estate Plan. Do you want to make sure your children or grandchildren have a college fund? Is there a charity that you want to support? Do you have a loved one with special needs you want to take care of? A common pitfall is getting bogged down trying to assign a beneficiary to every single asset. Instead think about the big picture, then your Attorney will help you piece together the assets to the beneficiaries in a way that will minimize tax consequences and fulfill your goals. For now, focus on the overarching results you would like to accomplish.
- Consider who you want to serve as Executor. The Executor is the person or entity responsible for carrying out the directions of your Will. Serving as someone’s Executor can be both an honor and a burden. Generally speaking, an Executor has primarily two responsibilities:
- Protecting the deceased person’s property until all debts and taxes have been paid; and
- Making sure what is left gets distributed to the people or organizations that are identified in the Estate Plan.
To accomplish these responsibilities, the Executor must follow the steps of the law, which include petitioning the court to probate the Will, sending legally required notices, preparing an inventory of all assets, paying debts and expenses, filing tax returns, settling any claims, and closing the Estate. It might also involve winding up a business, selling a home, or protecting the value of an important collection.
You may select an individual—such as a family member—or a Corporate Executor—such as Hills Bank and Trust Company. You may also select Co-Executors to serve jointly. Consider carefully the extent of these duties and the responsibility associated with carrying them out when selecting an Executor. You should also name an alternate Executor in the event the primary Executor is unable or unwilling to serve.
Please visit our blog, HillsHelps.com, next Wednesday for the second part of our 4-part series on planning your retirement journey.This post is for information purposes only and should not be interpreted as providing legal advice. You should consult an Estate Planning Attorney before executing any legal documents. Investment products are not a deposit, not FDIC insured, not insured by any government agency, carry no bank guarantee, and may go down in value.
View the complete 4-Part Estate Planning Series:
- Part 1 – Getting Started with Estate Planning
- Part 2 – Understanding Trusts
- Part 3 – The Three Taxes
- Part 4 – Account Titling – The Good, The Bad, and The Misunderstood