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Estate Planning Documents Checklist: 9 Steps To Prepare

Written by: Rebecca Rosefelt, Esq. , Contributing Author
Reviewed by: Catherine Hodder, Esq. , Senior Legal Writer
Last updated March 06, 2024

Still not sure what estate planning tools you need?

For the average American, the most challenging part of estate planning is knowing where to start. Most of us know we should have some plan in place to protect our assets and ensure care for our loved ones when we are gone, but it is hard to know the steps necessary to make that happen.

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A comprehensive estate plan does more than dispose of your assets when you pass away. It should also guide your family in handling your affairs if you become temporarily or permanently incapacitated. Likewise, it should outline your wishes for end-of-life care if you cannot make health care decisions independently.

That is why FindLaw has created a checklist with the steps you need to take to create a comprehensive estate plan that will meet your needs and those of your loved ones. Our list will help you collect the documents and information necessary and how to use them to create an effective estate plan.

1. Identify Your Goals

Your first step in creating an estate plan is identifying what you hope to achieve. Not everyone has the same goals in life, and the same is true when planning their estate. Establishing what you hope to accomplish with your plan will go a long way toward determining your next steps.

Common estate planning goals include:

  • Providing for your children or other loved ones
  • Protecting your assets and ensuring they are correctly managed
  • Avoiding the need for a probate court to distribute your assets
  • Reducing or eliminating the taxes on your estate
  • Creating a plan for managing your assets should you become incapacitated
  • Guidance on medical treatment should you be unable to communicate your wishes

2. Create a List of Your Assets

Before you can create a plan for distributing your assets after you die, you first need to get a handle on what those assets are. When you die, the total of your assets becomes your estate. Assets not included in your estate plan will still be considered part of your estate and may end up being distributed by the probate court under the terms dictated by state law.

Additionally, probate court proceedings often take six months to two years and may require your beneficiaries to hire a lawyer to represent them. Many estate plans allow your assets to pass to your beneficiaries outside of probate, saving them time and money.

Assets commonly part of an estate plan include:

  • Real estate
  • Valuable personal property, such as jewelry
  • Stocks and investments
  • Cash and bank accounts
  • Businesses in which you have an ownership interest
  • Vehicles, including boats, cars, motorcycles, and planes
  • Life insurance policies
  • Retirement accounts and annuities
  • Death benefits which you are eligible for

3. Determine What You Owe

Dying does not relieve you of all your debts and obligations you had when you were alive. In most cases, the debts you owe are paid by your estate before assets go to your beneficiaries. When your debts exceed your estate assets, your beneficiaries inherit nothing. Fortunately, your creditors cannot go after your beneficiaries if your estate cannot cover your debts.

While debt will not pass to your beneficiaries, it can substantially reduce or eliminate your estate. Knowing what you owe helps your executor manage your estate and keeps your beneficiaries’ expectations realistic. Your children should not expect to inherit your $1 million vacation home if you still owe the bank $1.2 million on the mortgage.

You should account for any debts in your estate planning, including:

  • Mortgages used to purchase a home or property
  • Car loans
  • Credit cards
  • Business loans if the business is part of your estate
  • Unpaid legal judgments or settlements
  • Financial obligations to a current or former spouse

The federal Fair Debt Collection Practices Act (FDCPA) lets debt collectors contact any person they believe has the power to pay a deceased individual’s debt to seek payment. Those include:

  • Spouses
  • Adult children
  • Guardians
  • Executors
  • Administrators

4. Identify Beneficiaries

One of the primary reasons most people create an estate plan is to ensure their assets go to those they love and care about when they die. Many people also want donate part of their estate to help their church or other charitable organization. It will help if you list those you want to assist and group them by priority.

It may be hard to prioritize the people and organizations you care about, but it may be a necessary evil. That is because after accounting for your assets and debts, you may discover that there is not enough for everyone

to receive as much as you would like. You may want to prioritize your children over a favored niece or an organization you admire if there is not enough to go around. If your financial situation improves, you can always amend your estate plan to include the lower-priority beneficiaries.

Identifying those you want to benefit from your estate will help you determine whether you need to name guardians for minor children or incapacitated adults. Finally, it will help establish whether your estate plan needs to include trusts to benefit minor children, adults unable to manage their finances, or charitable organizations.

5. Plan for Illness or Incapacitation

A good estate plan does more than lay out what should happen when you die. It should also explain your wishes for your medical care and management of your finances should you be unable to make decisions on your own due to illness or other factors. Most estate plans address the following issues:

  • Health care. You can explain what measures you would like taken on your behalf should you be too ill to make them for yourself in an advance health care directive and your choices for end-of-life care in a living will. You can also give someone the authority to make medical decisions on your behalf by giving them a health care power of attorney.
  • Asset management. You can accomplish this by giving someone power of attorney to manage your affairs. It can also be a backup trustee if you put your assets into a living trust and are currently serving as a trustee. A durable power of attorney is when you name someone to manage your assets if you are incapacitated.
  • Long-term care. A well-written estate plan addresses issues that may arise if you are in a nursing home or other long-term care facility. For example, you may want to purchase long-term care insurance or structure your affairs for Medicaid eligibility.

6. Decide if You Need Life Insurance

Life insurance is a vital part of many estate plans, especially if you have minor children, family members with special needs, or other loved ones who depend on your income. But before you purchase a life insurance policy, you need to sit down and calculate how much is necessary to support those who rely on you.

A $500,000 life insurance payout may sound like a lot of money. However, if you earn $75,000 annually, the insurance only replaces your income for fewer than seven years which may be insufficient if you have young children. You may want to speak to an estate attorney or a financial advisor to calculate how large a policy you will need to support your dependents.

Since life insurance benefits pass outside of a will or probate, be careful in naming who should receive your death benefit and keep them updated to reflect any life changes. If you forget to include beneficiary designations, it usually takes court action for them to receive any portion of your death benefit. Such cases are generally time-consuming and expensive for the overlooked beneficiary.

If your children are minors or you would like the benefit to go to someone with a disability and unable to take care of their affairs, you may create a trust to receive the benefit on their behalf. Life insurance policies do not allow direct payouts to children under the age of 18.

7. Plan for the Estate Tax, if Necessary

The estate tax is less of a concern than it was a generation ago. That is because Congress has been steadily raising the estate tax exemption in recent decades, and it no longer applies to as many American estates as it did a few decades ago. For 2021, all individual estates valued at less than $12.92 million do not need to pay the tax.

Congress has also reduced the bite the tax takes out of your estate in recent years. In 1997, the maximum estate tax rate was 55%. The rate dropped to 40% after the 2017 Tax Cuts and Jobs Act (TCJA).

If the total value of your assets is greater than $12.92 million, there are still steps that you can take as part of your estate plan to minimize the estate tax the estate must pay. In many cases, you can move assets into trusts to pass them to your beneficiaries outside of your estate. Trusts exist as independent entities, and any assets transferred to a valid trust will not be included in your estate for tax purposes.

It may seem that the estate tax exemption is so high that it would be a waste of time and energy for most people to plan for it. Still, the exemption will drop significantly in January 2026 because the changes instituted by the TCJA expire at the end of 2025. If Congress does not extend the TCJA, the exemption will decrease to roughly $6.5 million on January 1, 2026.

8. Decide if You Need to Create Trusts

A trust is a legal entity created to hold property on behalf of one or more beneficiaries. The person or organization who makes the trust through a will or trust agreement is known as the “grantor.” The trustee manages the assets and has a fiduciary duty to act according to the grantor’s wishes and in the beneficiaries’ best interests.

Why Create a Trust?

Two of the biggest reasons to use trusts in estate planning are to pass property outside of probate and minimize the estate tax on assets transferred to the trust. Other uses for trusts in estate plans include protecting assets from creditors and controlling asset distribution to beneficiaries.

Probate is the process through which a court distributes a deceased’s assets under the terms of a will or, if there is no will, under the terms laid out in an estate’s intestate laws. Passing assets to beneficiaries outside of probate reduces the time and expense of probate proceedings.

Trusts help avoid estate tax by letting you pass assets to your trust while alive, so assets are part of your taxable estate. However, as a separate entity, any income earned by the trust may be subject to federal and state income taxes.

Types of Estate Planning Trusts

Generally, there are two types of trusts used in estate planning: Revocable living trusts and irrevocable trusts.

  • Revocable living trusts, sometimes called “living trusts,” are created during the grantor’s lifetime, and the grantor serves as its initial trustee. That means the grantor can change the terms of the trust, the property held in the trust, and revoke the trust during their lifetime. When the grantor dies, the revocable living trust becomes an irrevocable trust.
  • Irrevocable trusts cannot be changed once established, even if the grantor is the one seeking to make the changes.

While moving your assets to a revocable living trust provides you with greater flexibility, it offers little in the way of asset protection because you still maintain control over the trust. In most cases, creditors cannot access assets held in a valid, irrevocable trust.

9. Determine the Documents You Will Need

After you have laid out everything in your estate plan, it is time to draft the legal documents. These documents may include the following:

  • A last will and testament
  • Advance directive and health care power of attorney
  • Financial power of attorney
  • Guardianship designations
  • Insurance policies
  • Titles and property deeds
  • One or more trust agreements

While it is not a legal document, it is often a good idea to create a document that gives your family or executor information on how to access your accounts and important documents, including your:

  • Safe deposit box
  • Financial accounts (including bank accounts, brokerage, and other investment accounts, retirement accounts, and IRA)
  • Digital assets, such as cryptocurrency
  • Passwords
  • Social Security number

Do I Need an Attorney?

Depending on the size of your estate and your family’s needs, it may be wise to seek legal advice. Especially if you have dependents with special needs, estate tax concerns, or need a trust, you should speak with a local estate planning attorney. However, if you have a small or simple estate, you can use FindLaw’s easy-to-use state-specific forms for a variety of estate planning documents:

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