How To Finalize Your Estate Plan

Estate Planning Is Critical

Think of an estate plan as an ongoing project that changes as your life changes. It’s never the wrong time to strategize for the management and transfer of your estate after your death, but certain major life events — like marriage, the birth of a child, or a death in the family — can move it to the top of the to-do list.

A well-thought-out estate plan:

• Addresses the needs of family members and loved ones who will eventually receive your assets
• Considers how the federal and state gift and estate tax laws may affect your assets
• Identify the legal instruments you need to accomplish your asset distribution goals, such as a will or a trust.

Although it’s stressful to consider these matters for the first time, finalizing an estate plan can bring a sense of security and peace of mind for both you and your family.

Essential Parts of an Estate Plan

Every person’s life is different, so there is no one-size-fits-all estate plan. Your estate plan will depend on the assets you own, the persons you wish to benefit, your state’s laws, and your objectives.

However, during the estate planning process, consider a few key documents. Most estate plans include one or more of the following:

• Last Will and Testament: A legal document that expresses how you want your personal property, bank accounts, real estate, credit cards, and other assets distributed to your heirs and beneficiaries after your death. In this document, you also name an executor or personal representative to oversee your estate’s administration and the probate process. If you have minor children, your will allows you to name a guardian for them if something happens to you.
• Revocable Living Trust: A revocable living trust is a legal document that you, the grantor, execute during your lifetime to oversee the distribution of your assets. This document allows you to designate a trustee to manage the assets in the trust and transfer them to beneficiaries after you pass away. A revocable trust is a popular estate planning document for those who want their heirs and beneficiaries to avoid going to probate court to settle their estate.
• Financial Power of Attorney: A financial power of attorney is a document granting a trusted individual the right to make business and financial decisions on your behalf if you are ever unable to make them yourself.
• Health Care Power of Attorney: A document that grants a trusted individual the right to make health care decisions for you in the event you are incapacitated and unable to do so yourself.
• Living Will: A document in which you set out your medical preferences, like end-of-life care and treatment decisions. The person you appoint in your health care power of attorney must follow and enforce the preferences outlined in your living will. Some states combine the health care POA, and the living will into one document, usually called an advance health care directive.

You should also be aware that assets like retirement accounts, IRAs, brokerage accounts, and life insurance policies often allow you to make beneficiary designations. When a decedent has designated beneficiaries for these assets, the assets bypass the probate process and go directly to the named individuals upon the decedent’s death. You must coordinate these non-probate assets with your estate plan to avoid confusion after you pass.

Finalizing an Estate Plan

States establish rules for preparing and finalizing estate planning documents. For example, Florida’s laws for finalizing a will or power of attorney may differ from California’s rules. Also, the state requirements for executing one document (e.g., requiring a notary for a POA) may not apply to other estate planning documents.

Following your state’s rules is critical to ensure your important documents are valid.

Executing Estate Documents

“Executing” an estate planning document simply means signing it in the manner required by law. State laws often require some security steps to make sure there is no mistake or fraud involved and that the person signing is not an imposter.

Be aware that state laws for executing estate planning documents vary. Here are some examples to keep in mind:

• Almost every state requires you to sign your last will and testament in the presence of two witnesses. Your witnesses must also sign the document. Many states require “disinterested” witnesses, meaning they do not have a personal stake in your estate.
• Some states require you to sign certain estate planning documents before a notary public, such as your health care POA and living will.
• Some states allow “self-proving affidavits” for wills. The witnesses of your will sign the affidavit before a notary stating they witnessed you signing your will. The affidavit allows the probate court to admit your will without requesting testimony from your witnesses.

Always check to see what your state requires for a document before executing it.

Notifying the Necessary People

You can keep your estate plan documents private during your lifetime if you want, but this isn’t necessarily a good idea. You should notify those who will administer your estate plan after you pass.

For example, if you name a fiduciary such as an executor or a guardian for your minor children, ask these people to agree if they are willing to serve before executing the documents. Likewise, consult the individuals you wish to appoint in your financial and health care POAs beforehand. If you’re concerned that certain family members may object to the terms of the document and pressure you to change your decisions, keep the details quiet from these people.

Another important part of the estate planning process is deciding where to store your documents. A safe or your attorney’s office are both good options. A safe deposit box is not an ideal location, as the bank seals the box when you die, and your executor needs a court order to access the contents of the box. Wherever you store your documents, make sure your appointed fiduciaries and/or family members know where to find and access them after your death.

It’s good practice to revisit your estate plan every few years and update the documents as needed to address life changes and new circumstances.

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Ready to Draft and Finalize Your Estate Plan?

Creating a simple estate plan doesn’t have to be a costly or time-consuming process. In fact, you can do it yourself with online tools. Once you’ve completed the step-by-step process and downloaded your forms, you’ll need to finalize them according to your state’s laws.