Checklist: What You Need to Create Your Estate Plan

An estate plan is the decisions and documents that will determine how your finances and health care will be handled if you become incapacitated and how your assets will be managed and distributed in the event of your death. It is something everyone should prepare, regardless of the size of their assets.

Your estate plan will likely have several components. This estate plan checklist will help guide you through the process of putting together your plan and will be helpful whether you're consulting with an estate planning attorney or planning to do it all yourself.

Questions To Ask Yourself Before You Start

Before you begin estate planning, you'll need to take some time to ask yourself some important questions. Jot down the answers as they come to you. Estate planning is a flexible process, and your estate plan isn't set in stone, so feel free to scratch things out and add things in if you need to.

Here are some of the questions you should consider before working your way through the checklist:

• Who do you want to inherit your assets?
• How should these assets be transferred?
• What estate planning documents do you want to use?
• If you have minor children, who do you want to be their guardian? And do you want to set up a trust to hold their inheritance until they're a certain age?
• Who do you trust to handle your financial affairs if you become incapacitated?
• Who do you trust to make health care decisions on your behalf if you become incapacitated?
• Who do you trust to manage your assets after your death and distribute those assets to your heirs?

Once you've gone through these kinds of questions and have a good idea of how you want to structure your estate plan, it's time to start on the checklist.

1. Take an Inventory of Your Assets

You might think you already know what you own, but once you get started making a list of your assets, you'll probably be surprised by how long your list is — and how you'll likely keep coming back to it to add yet another item.

If you know who you'd like to inherit an item, be sure to make a note of the intended beneficiary as well. It's also a good idea to include an estimate of each item's value.

Physical Assets

Your physical assets, also known as tangible assets, were probably the first things you thought of when you started compiling your inventory of assets. Whether it's real estate or personal property, it's important to include a description of each item — after all, not everyone will know what you mean by "grandma's painting" — as well as where the item is located.

Your physical assets might include:

• Your home
• Other real estate you own, such as a vacation home or rental property
• Jewelry
• Clothing and accessories
• Artwork
• Vehicles
• Furnishings
• Computer equipment
• Power tools
• Collectibles

Intangible Assets

You should also include intangible or nonphysical assets in your list. For these assets, note important information such as account or policy numbers. If they're associated with a physical document, note where that document is located.

Your intangible assets might include:

• Life insurance policies
• Financial accounts such as bank accounts and brokerage accounts
• Retirement accounts
• Stocks and bonds
• Business interests
• Intellectual property, such as copyrights or patents
• Digital assets, such as login information and passwords to online accounts

2. Make a List of Your Debts

A list of what you owe is just as important as your inventory of assets. While your creditors can't go after your beneficiaries individually, they can collect from your estate. Keeping a list of your credit obligations, such as credit cards, and up-to-date information about account numbers and important contact information will help your executor manage your liabilities and pay off your debts.

3. Gather Important Contact Information

If you went through the list of questions before you started working on this checklist, you already know how important various people will be to your estate plan. You want to include in your list of the following people not only their names but also their contact information.

Executor

Also known as your personal representative or estate administrator, your executor is the person who will manage your estate, pay your debts, and distribute your assets to your beneficiaries. There's a lot of responsibility that comes with being an executor, so you should talk with whomever you've chosen to make sure being your executor is something they want to do.

Successor Executor

You should also choose someone to be your successor executor. In the event your executor can't carry out their duties as executor, your successor executor will step in and take over those tasks. Like with your executor, you should make sure your successor executor is someone who is willing to take on the role.

Guardian

If you have minor children, it's critical to name a guardian who can take care of them in the event anything happens to you and your children's other parent. If no guardian is named, and neither parent is living, it's up to the courts to decide, which could lead to someone you feel unsuitable being appointed guardian of your children.

Power of Attorney Agent or Attorney-In-Fact

A well-rounded estate plan includes both a financial power of attorney (POA) and a health care power of attorney, and you will need someone to act as your agent or attorney-in-fact under each type of POA (note that the term attorney-in-fact does not mean the agent you choose for each role needs to be an attorney).

Beneficiaries

Your beneficiaries are the people who will inherit your assets. Certain assets you own, such as life insurance policies and retirement accounts, let you designate a beneficiary, which means you don't include that asset in your will. You will need to name beneficiaries in your will who will receive your remaining assets.

4. Last Will and Testament

You need a will — in fact, everyone should have a will, even if they don't have much in the way of assets. Your will dictates how your assets, other than jointly owned assets and assets with beneficiary designations, are to be distributed among your heirs.

Your will is also where you name your executor, or personal representative, and your successor executor. It's also where most people name a guardian for their minor children.

It's important to know that if you die without a will, your state's laws of intestacy will govern who will inherit your assets (intestacy basically means dying without a will). Also, your will needs to go through probate before your executor can distribute your estate's assets.

5. Beneficiary Designations

Some assets allow you to designate a beneficiary, which means they avoid the probate process. As long as you've filled out the beneficiary designation for these assets, they'll go directly to the beneficiaries you've chosen, even if these assets have been included in your will.

Assets that allow you to designate beneficiaries include:

• Retirement accounts, including IRAs and 401(k) retirement plans
• Life insurance payouts
• Annuities
• Transfer on death (TOD) assets, such as brokerage accounts and bank savings accounts

Be sure to keep a list of account numbers, company contact information, and the physical location of hard copies of these types of assets.

6. Financial Power of Attorney

A financial power of attorney is a legal document that authorizes your agent to manage your financial affairs in the event you become incapacitated and are no longer capable of making financial decisions on your own. Trust plays an important role when selecting the person who you want to be your agent under your financial power of attorney, because this person will be the one who will make important decisions about your money when you're not able to.

7. Health Care Power of Attorney

Under a health care power of attorney, also known as a medical power of attorney, the person you appoint as your health care agent has the authority to make medical decisions on your behalf if you become incapacitated and can no longer make or communicate your wishes about your medical care. Like your agent under your financial power of attorney, your health care agent should be someone you trust. You should also communicate your wishes about various medical treatments to them, so they have more guidance if tragedy strikes and they need to step in.

8. Living Will

A living will is also known as an advance directive. It's a document that sets out your wishes for end-of-life care in the event you become incapacitated and can no longer communicate your choices to your health care providers. While it's similar to a health care power of attorney, a living will only deals with end-of-life decisions — for example, supplemental feeding or resuscitation — and many people have both a living will and a health care power of attorney in their estate plans.

9. Trusts

Depending on your specific circumstances, you may also want to have a trust as part of your estate plan. There are a variety of trusts for various purposes, such as trusts for minor children. Living trusts, also known as revocable living trusts, are a popular vehicle for avoiding probate, as the trust owns the assets held in the trust. If you're considering a trust for your estate plan, it's a good idea to consult with an experienced estate attorney, as trusts can be complicated to set up.

10. Letters of Instruction

Letters of instruction aren't legal documents, but they can be very helpful for your loved ones, family members, or executor. A letter of instruction can set out your wishes for anything that's not covered in your will.

For example, you could write a letter of instruction to guide your executor in administering your will, including details such as people's contact information, the location of safety deposit keys, or important documents or your login details for various online accounts.

11. Gather Together Your Important Documents

It's also helpful to gather together all of your important financial, health, and legal/estate planning documents. 

These documents include:

• Deeds and titles to real estate you own
• Documentation of your ownership of other assets
• Insurance policies
• Tax documents
• Personal identification documents such as your passport and birth certificate
• Brokerage accounts and bank statements
• Last will and testament
• Financial power of attorney
• Health care power of attorney and living will
• Trust documents

You should also make copies of the legal documents in your estate plan to give to your executor and your spouse.

12. Review and Update Your Estate Plan

The final step in this checklist is a periodic review of your plan. During this review, you can make any necessary updates to account for important life events, such as a marriage or divorce, or the birth of a child or grandchild. Regularly reviewing your estate plan helps to keep it up-to-date and consistent with your wishes.

Need Assistance? Consult With an Estate Planning Attorney

Putting together a comprehensive estate plan can be complicated. In particular, you want the legal documents in your estate plan to be valid even if they end up scrutinized in probate court. If you have questions or need assistance, talk with a local estate planning attorney who can help you create an estate plan that meets all your needs.