To Do Before You Die: 16 Estate-Planning Tips

When Aretha Franklin died intestate—without a legal will—in 2018, she joined a surprisingly long list of prominent people, including Prince, who did the same. By not preparing an estate plan, she complicated the task of settling her affairs for her survivors. While your estate may not be as large or complex as a famous singer’s, it’s just as important to have a plan in place in the event of your death.

Which Legal Documents Do I Need?

First and foremost, everybody needs a will. No matter how modest your assets are, you’ll want them to get into the right hands with no unnecessary delay or expense.

Beyond that, consider one or both of the following, depending on your circumstances:

• A trust. This is a legal contract that will allow an individual you name (the “trustee) to manage and oversee the assets you bequeath for the benefit of the people you name. If you have dependent children or elderly family members who are unable to fully manage their own affairs, a trust will help them. Very wealthy people often have them, in part so that they can manage their assets for multiple generations.
• Power of attorney. This document grants a trusted person you name (your “agent”) to act on your behalf if you become incapacitated. This permission can be as broad or as limited as you choose. For example, it can cover medical decisions or financial decisions, or both.

An Estate Planning Checklist

Estate planning goes well beyond drafting a will. Thorough planning means accounting for all of your assets and ensuring that they transfer as smoothly as possible to the people or entities you wish to receive them.

You need a plan, and you must make sure that your intended heirs have all of the information they need to carry it out.

Not sure how to get started? Follow this checklist, and you’ll have covered all of your bases.

1. Itemize Your Inventory

To start, go through your home inside and outside, and make a list of all valuable items. Examples include the home itself, televisions and computers, jewelry, collectibles, vehicles, art and antiques, lawn equipment, and power tools.

As you go, you might add notes if you come across something that you want to leave to a particular person.

Don’t forget possessions of mainly sentimental value like family pictures. Make a note of possessions you want to donate to a favorite charity.

You might take pictures to shortcut the project and avoid confusion.

The list may be a good deal longer than you expected.

2. Document Your Non-Physical Assets

Add your financial assets and entitlements to the list, with enough specifics that they can be claimed by your heirs.

This includes bank and brokerage accounts, 401(k) plans, IRAs, life insurance policies, and any other policies such as long-term care, homeowners, auto, disability, and health insurance.

Include the account numbers and specify the location of any physical documents you have in your possession. List contact information for the firms holding these non-physical possessions.

If it makes it easier, attach a recent statement or another paper document that indicates the critical information like account number, company, and contact information.

3. Assemble a List of Debts

Make a separate list for all of your open credit cards and other obligations. This could include auto loans, mortgages, home equity lines of credit (HELOCs), and any other debts or open lines of credit you have.

Note the account numbers, the location of signed agreements, and the contact information of the companies holding the debt.

Include all your credit cards, noting which ones you use regularly and which ones are sitting in a drawer unused.

This is another chore that can be made easier by attaching a recent statement or other document that lists the critical account information.

4. Make a List of Memberships

If you belong to any organizations such as AARP, The American Legion, a veteran’s association, a professional accreditation association, or a college alumni group, make a list of them.

In some cases, these organizations may offer accidental life insurance benefits (at no cost) for their members, and your beneficiaries may be eligible to collect.

Include any other charitable organizations that you support. You can let your beneficiaries know which charitable organizations or causes are close to your heart and to which you might like donations to go in your memory.

Make a note of any automatic donations you make regularly to a charitable organization so that your heirs can cancel them or take them on.

5. Make Copies of Your Lists

When your lists are complete, date and sign them and make at least three copies. The original should be given to your estate administrator (more on that below).

The second copy should be given to your spouse or other main beneficiary and placed in a safe deposit box.

Keep the last copy for yourself in a safe place. And don’t forget to tell a couple of your family members where it is. Don’t make them tear up the floorboards looking for it.

6. Review Your Retirement Accounts

Accounts and policies that have designated beneficiaries will pass directly to those people or entities upon your death.

Be aware that it doesn’t matter how you direct that these accounts or policies be distributed in your will or trust. If there’s a conflict, the beneficiary designations associated with the retirement account will take precedence.

Check your online account or contact your employer’s customer service team or plan administrator for a current listing of your beneficiary selections for each account. Review them to make sure they’re current. This is especially important if you have divorced and remarried.

7. Update Your Insurance

As with retirement accounts, life insurance and annuities will pass directly to your named beneficiaries. If you have life insurance, make sure your beneficiaries are up to date and listed correctly.

In terms of timing, this might be the most critical part of your estate plan. Your heirs will need immediate access to some of your assets for their daily needs as well as to plan for your funeral.

8. Authorize ‘Transfer on Death’ Designations

Depending on your state’s laws, your heirs might have to go through a probate court procedure before your assets are distributed. Probate is always required if a person dies intestate.

This process, in which your assets are distributed per court instruction, can be costly and time-consuming.

Many assets, such as bank savings, CD accounts, and individual brokerage accounts, are unnecessarily probated every day. If you hold these accounts, they can be set up—or amended—to have a transfer on death (TOD) designation, which allows the beneficiaries to receive the assets without going through the probate process.

Contact your custodian or bank to set this up on your accounts.

9. Choose a Responsible Estate Administrator

Your estate administrator or executor will be in charge of administering your will when you die. It is important that you select an individual who is responsible and competent to make decisions.

Your spouse is not necessarily the best choice. Think about how the emotions related to your death will affect this person’s decision-making ability.

If you foresee any issues, consider other qualified individuals. You might name a close friend or another family member who you trust to act impartially on your behalf.

10. Draft Your Will

Everyone over the age of 18 should have a will. It is the rulebook for the distribution of your assets, and it could prevent havoc among your heirs.

It’s best done as soon as you have prepared all of the documentation described above. Your list of assets will make it easier to decide who gets what.

A will can also name a guardian for your minor children and designate who should care for your pets. You can leave assets to charitable organizations through your will, too.

Wills are relatively inexpensive estate-planning documents to compose; many attorneys can help you craft a will for less than $1,000, depending on the complexity of your assets and your geographic location.

You can also write your own will with the assistance of online services or other software packages.

Make sure that you sign and date your will in front of two non-related witnesses, who should also sign the document. Then have it notarized.

Finally, make sure other people know the location of the document so they may access it when needed.

11. Regularly Review Your Documents

Review your will for updates at least once every two years and after any major life-changing events like a marriage, divorce, or the birth of a child. Life is constantly changing, and your assets and wishes are likely to change from year to year, too.

12. Copy Your Administrator

Once your will is finalized, signed, witnessed, and notarized, make sure that your estate administrator gets a copy.

The original should be kept in your home or in your attorney’s office, You should also keep a copy in a safe place at home.

13. Visit an Estate Attorney or a Financial Planner

You may think that you’ve covered all your bases, but it’s a good idea to consult with a professional on a full investment and insurance plan. And if it’s been a while, you may want to revisit your plan.

As you get older, your needs may change, such as figuring out if you need long-term care insurance and protecting your estate from a large tax bill or lengthy court processes.

Professionals are up on changes in legislation and income or estate tax laws, which could impact your bequests.

14. Simplify Your Finances

If you’ve changed jobs over the years, you may have several 401(k) retirement plans still open with past employers or even several different IRA accounts. You may want to consider consolidating these accounts into one individual IRA.

Consolidating accounts allows for better investment choices, lower costs, a larger selection of investments, less paperwork, and easier management for both you and your heirs.

15. Complete Other Important Documents

At a minimum, you should create a will, power of attorney, healthcare proxy, and living will.

Consider setting up both financial and medical powers of attorney so that people you trust will be there handling your affairs should you become incapacitated.

You can also write a letter of instruction to leave step-by-step instructions as well as spell out your personal wishes for things like your funeral or what to do with your digital assets like social media accounts.

If you’re married, each spouse should create a separate will, with plans for the surviving spouse.

Finally, make sure that all the concerned individuals have copies of these documents.

16. Take Advantage of College Funding Accounts

You may want to set up 529 college savings plans for your grandchildren as part of your estate plan.

In these plans, savings grow tax-free, and many states offer tax deductions for the person contributing the funds.

The Bottom Line

Procrastination is the biggest enemy of estate planning.

While none of us likes to think about dying, improper or no planning can lead to family disputes, assets getting into the wrong hands, long court litigation, and excess money paid in estate taxes.

So pick a time to get started. To quote Benjamin Franklin, “By failing to prepare, you are preparing to fail.”