Estate planning is an essential task but can feel overwhelming. Use this list of seven questions as a basic guide to help simplify the process. Although you can take some steps yourself, it is recommended that you seek the services of an attorney who will be able to draw up and file legal documents in accordance with state law and answer your questions. Note: everything mentioned here is optional and may or may not apply to your specific needs and wishes.
1. Have I planned for joint ownership?
This is one of the first questions you should ask regarding any asset you own, including your home, vehicles, and various accounts. When an asset is held jointly, upon the death of one of the named owners, the asset passes to the survivor free of probate (see definition below).
Terms to Know
Decedent: A person who has died.
Estate: Property and assets belonging to the decedent.
2. Have I designated beneficiaries for all my assets?
When you name a beneficiary for an asset, it transfers upon your death (free of probate) to the named person, provided you complete a beneficiary designation form, also known as a "payable on death" designation. Many types of accounts allow this, including investment accounts, IRAs, other retirement accounts, and life insurance policies.
Terms to Know
Beneficiary: A person designated to receive something according to the terms of a will or trust.
Probate: A court procedure for settling the personal and business affairs of a decedent by proving that his or her will is valid and establishing the legal transfer of property to any named beneficiaries. If there is no valid will or trust, an administrator will be appointed by the state to supervise the legal transfer of property to heirs.
3. Have I considered establishing a living trust?
A living trust is a legal document similar to a will but with the advantage of allowing your estate to pass to beneficiaries privately, without expensive court proceedings or probate delays. It also allows you to instruct a chosen trustee how you want all assets in the trust managed during your lifetime in the event of illness or incapacity.
Terms to Know
Grantor/Trustor: The person placing cash, real estate, etc., into a trust.
Trustee: The person or legal entity who receives property and places it in a trust, and manages the trust for the benefit of the beneficiary(ies) in ways consistent with the trust declaration and good business practice.
Corpus of a trust: The body of assets placed in a trust. The trust holds title to all property included in the corpus.
4. Have I made a will?
This is the most basic step everyone should take, even if you have a small estate. Any assets you have which are not designated to transfer to survivors because of joint ownership, beneficiary designations, or a trust usually must pass through probate. At that point, a will lets you control how those assets are distributed. Every state creates a “state-written will” for those who have not made their own. The laws vary from state to state, but if you neglect to make a will, there is no guarantee your wishes will be met.
Terms to Know
Testator: The person who makes a will; one who dies leaving a will.
Executor: The business manager of your estate designated in your will to manage and carry out the instructions, the payments of debts, the distribution of property, and to settle accounts according to the will.
5. Have I completed a financial durable power of attorney form?
A durable power of attorney takes effect if you can no longer handle your financial affairs because of illness, sickness, or incompetence. The form allows you to designate a person who will be legally authorized to manage your financial affairs.
6. Have I completed a medical durable power of attorney form?
This form lets you appoint someone to help with personal matters, such as health care, medical attention, or personal care in the event you become unable to take care of yourself.
7. Have I completed a living will?
If you suffer an incurable injury, illness, or terminal disease where medical life-sustaining measures would only prolong your death and keep you alive at great expense to your family, a living will states that you would not want these measures taken.
Answering these questions will take you far down the road in planning your estate. For additional help, call 866.621.1878 to speak with a planned giving consultant or email firstname.lastname@example.org.
This article does not constitute legal or financial advice and is not a substitute for obtaining professional legal or financial counsel.