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October 23, 2024
Steps to Start Estate Planning
Understand the importance of estate planning but not sure where to start? You can take these first steps yourself while you’re still learning the details of estate planning.
When you understand what’s involved in estate planning – funeral arrangements, dependent support, asset distribution, business succession – you may feel a bit overwhelmed. Most people find it difficult to make these types of decisions, but estate planning is an important part of financial planning. Start with these first steps to get you organized and focus your thinking on what you want in your estate plan.
Estate planning is a complex financial and legal matter that may seriously affect your life and the lives of the people you care about.
- Consider Your Goals
You’ve probably spent time thinking about your lifetime financial goals. Now it’s time to consider what you’d like your accumulated assets to accomplish after you’re gone. Think about to whom you want to leave your financial assets, along with any individuals to whom you want to leave specific assets. It is a good idea to write down your goals and continue adding to your list as you think of more. Here are some questions to ask yourself:
- Do you have family members with special needs you wish to provide for?
- Do you have family members for whom you’d like to address specific financial needs?
- Are you concerned about the timing of distributions for beneficiaries of different ages or generations?
- Will you need to hold some assets in trust until beneficiaries come of age?
- Will you need a succession plan for your business?
- Are there any divorced spouses you wish to exclude?
- List Your Assets
Creating an inventory of all your assets will help keep the estate planning process organized. List all your physical and nonphysical assets – property, vehicles, investments, health savings account, life insurance policy – anything with monetary or sentimental value. Make a note on your inventory about which assets are jointly held, which ones are just in your name, and which are your spouse’s. Don’t forget to include insurance policies or any entitlements that will be triggered upon your death. This is a good time to organize your property deeds, account statements, and other paperwork. Your inventory may change over time, so remember to keep it updated when you acquire or sell off assets.
- Include Your Spouse/Partner
You may be the one to drive the estate planning process, but your spouse or significant other needs to be involved. The two of you should discuss your wishes if one dies before the other since that is the most likely scenario. You may have dependents and assets in common, and you will have to agree on how to handle them after your death. Also, review the beneficiaries on each of your retirement and insurance accounts. You may want to make changes to align your beneficiary choices with the strategy you are now developing. You’ll also want to keep a list of those beneficiaries handy while you go through the estate planning process together.
- Talk to a Professional
If you have a small estate, you may be tempted to handle estate planning on your own. Estate planning is a complex financial and legal matter that may seriously affect your life and the lives of the people you care about. Talking to a professional can give you peace of mind that you are planning for all possible contingencies. You could start by contacting your accountant or attorney. If you do not have an existing relationship with these professionals, your financial institution is a good place to start.
It’s okay to feel overwhelmed about the estate planning process, but don’t let that deter you from starting the process with these first steps. Before you talk to a professional, you might also want to learn some basic estate planning terms and some of the documents involved in an estate plan. If you need help, you can always contact your financial institution for guidance.