Written By : Elaine Silvestrini
Edited By : Kim Borwick
This page features 11 Cited Research Articles

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Everything you own, from your home to your car to your stamp, art or vinyl record collection, makes up your estate. Estate planning is essential to ensuring that you have a say in your legacy. It may seem unpleasant or complicated, but a little work now will be a huge relief to your loved ones later.

A 2016 Gallop poll found that only 44 percent of Americans have a will, the basic building block of estate planning. Similarly, A 2019 survey from Caring.com found that while more than 50 percent of Americans have talked about estate planning, only 40 percent actually have a will or trust. Most of the respondents said they “just hadn’t gotten around to it.”

Begin preparing today with this comprehensive step-by-step estate planning checklist, which includes definitions of relevant terms, costs associated with estate planning, and a list of important documents.

Estate planning checklist:
  • Take inventory
  • Hire a professional
  • Create a will and designate beneficiaries
  • Consider a living trust
  • Designate power of attorney
  • Estimate taxes
  • Gather documentation
  • Schedule updates to your estate plan

Take Inventory of Your Assets

We sometimes associate the word “estate” with wealth, but the fact is that we all have an estate. Your estate is everything you own, all your property and possessions, and it might be more than you realize.

The first step of estate planning is taking stock of your assets, including:
  • Investments, such as stocks, bonds and CDs
  • Real estate
  • Vehicles
  • Retirement accounts, including 401(k)s and IRAs
  • Annuities
  • Business assets
  • Jewelry, furniture, books, family heirlooms and other objects

Once you inventory your property, you need to ask yourself an important question. What objects and assets do you want to protect and transfer to others upon your death? Consider things you own independently and jointly.

Then create a list of beneficiaries, or people you want to inherit these items.

You will need to estimate the value of tangible and intangible assets, so it’s helpful to include a recent property appraisal of your home and other items.

Hire a Professional Estate Planner

Not everyone needs a legal professional to assist in the estate planning process. Even the American Bar Association acknowledges that in some situations — such as when a person has minimal assets solely in his or her name — it can be cost-effective to do it yourself or use an online service.

In general, however, the association advises against do-it-yourself estate planning, noting that the average person should “proceed with caution” when considering this option because there is too much is at stake.

“Mistakes made in the drafting of such an important document can profoundly alter familial relationships, leaving our family members at best confused or disappointed and at worst locked in hostile litigation,” the association notes on its website.

Financial experts encourage people with complex estates to consult a legal professional. Circumstances such as ownership of multimillion-dollar estates, second marriages, blended families, owning property outside the United State and personal business ventures should be reviewed by an attorney.

Other options exist if attorney fees are intimidating. Many states offer legal aid resources to reduce cost for qualifying low-income planners. Alternatively, you can ask a certified public accountant or tax professional for help or look for lawyers who advertise discounted bundle deals.

Be as prepared as possible if you do speak with an attorney. Get an estimate of how much it will cost to complete your estate plan. Many law firms provide a checklist of documents to bring to your first consultation. This saves time and, hopefully, a little money, too.

Estate Planning Terms You Should Know
A typically lengthy court review process that proves the validity of a will. If there is no will, state law determines how property is distributed.
A document outlining who receives a person’s assets after death. Also known as a last will and testament.
A person named in a will to carry out the terms of the document as it travels through probate.
Living Trust
A document in which another party, called a trustee, holds legal title to property and assets for beneficiaries. Assets are placed into the trust when the grantor is alive and can be distributed to beneficiaries before or after the grantor’s death.
Financial Power of Attorney
This document appoints a trusted person to oversee the legal and fiscal affairs of another if he or she becomes incapacitated. It specifies exactly how much power an agent has. Power of attorney ends when the person granting power dies.

Wills and Living Trusts

A will is a legally binding document that specifies who receives your assets after you die. This document, also known as a last will and testament, ensures your wishes are carried out.

Without a will, the state determines where your belongings go and who receives them, including choosing guardians for your children.

Assets are usually distributed to family members, but the exact allocation may not be what you want if the state handles it.

Wills can be complex or simple. With few exceptions, every will is subject to probate, or a court review meant to prove a will is authentic. Probate can take months or even years.

What Should My Will Include?
  • An executor, or an appointed person who oversees your estate as it travels through probate
  • Guardianship for your minor children
  • 401(k) plans
  • Any nonfamily members, such as godchildren, pets, friends and your church, to whom you wish to leave assets
  • Nonprofit charities to which you want to donate part of your estate

When drafting your will, don’t forget about items or beneficiaries you’ve already accounted for. For example, you may have transferred cash into a charitable gift annuity as part of your planned giving. If you’ve been receiving income from this annuity, the payments will cease upon your death, and the charity will collect the remaining funds.

So, in this case, the charity has received your donation, and the stream of income the annuity provided will no longer be available to your heirs.

Living Trusts

A living trust is another way to leave assets to beneficiaries.

A trust provides greater control than a will because you can stipulate specific requirements heirs must meet in order to receive assets. If trust conditions do not break the law, they are legally binding.

Living trusts can be revocable, meaning you maintain control of the assets, or irrevocable, which means you can’t make changes without the consent of the beneficiary.

Power of Attorney

A will details what happens to your money and belongings after you’re no longer here. But what happens if you become incapacitated? Accidents and illness can render people unable to make important personal medical and financial decisions.

This is where advanced directives enter the picture.

Financial Power of Attorney

A financial power of attorney grants a person the authority to make legal and fiscal decisions on your behalf. Real estate, taxes, banking and personal business can all fall under this umbrella.

According to this document, you are the “principal,” and the person you appoint is your “agent” or “attorney-in-fact.” You, the principal, decide exactly how much power the agent holds. For example, you can grant your agent access to your bank account while stipulating that he or she cannot invest on your behalf.

In order for this document to remain in effect if you become mentally incompetent, you must include language that makes it a durable power of attorney. If you don’t specify that the power of attorney is durable, your appointed agent won’t be authorized to make end-of-life decisions for you.

Estate and Inheritance Tax

Unless you are a multimillionaire, federal estate tax will not affect you. Under 2019 tax code, you can transfer $11.4 million after you die without triggering federal tax. This is an increase from the $11.18 million cap that was in effect in 2018. Married couples can shield up to $22.8 million.

Federal estate tax was assessed on about 1,890 estates in 2018, down from 52,000 taxable estates in 2000, according to Forbes and Tax Policy Center.

Did You Know?
An estate must be worth at least $11.4 million to trigger federal estate tax.

At least 13 states and the District of Columbia leverage their own estate tax, many of which include asset thresholds that are lower than that of the federal government. These range between $1 million and $5.7 million.

Six states also levy inheritance tax. Inheritance tax must be paid by the heir, not the estate of the deceased. The amount an heir pays often depends on their relationship with the deceased. Spouses, for example, are exempt, but other relatives may pay higher rates.

Under the current tax code, wealthy people can limit their tax liability by using a grantor retained annuity trust, or GRAT, in their estate planning. The GRAT allows for the gifting of assets without having to pay the estate taxes.

Important Documents

Knowing that you’re providing for your loved ones and caring for them even when you’re no longer with them offers a great sense of peace. You can enjoy your retirement years without the nagging worries about what you’ve left undone.

Refer to this complete checklist so you can be confident in your plan and in control of your estate.

First, gather these signed documents and keep them in a safe place.
  • Will
  • Trust
  • Advanced medical directive
  • Insurance policies
  • Retirement plans, 401(k) accounts and IRAs
  • Financial power of attorney

Leave copies with a trusted loved one, the executor of your will and your attorney. You can also place a copy in a fire-proof safe. Just make sure to give the combination to someone you trust.

Some experts advise storing these important documents with your estate papers:
  • Marriage, death, and adoption certificates
  • Deeds and mortgage contracts
  • Certificates for stocks, bonds and annuities
  • Account numbers and passwords
  • Recent investment and bank account statements
  • Debt information, including credit card statements, mortgages, taxes and loans
  • Safe deposit box information

Keep Your Estate Plan Updated

Once your estate plan is finalized, keep it updated. Bob Carlson, senior contributor to Forbes, suggests revisiting paperwork every three to five years. Major life changes are another opportunity to review your estate and make necessary revisions.

Times to Review Your Estate Plan
  • At the birth, adoption, or death of a child
  • After marriage, divorce, or separation
  • When you move to a new state
  • After major income changes
  • When there have been major changes to tax law
Last Modified: July 1, 2020

11 Cited Research Articles

  1. American Bar Association. (n.d.) Do It Yourself Estate Planning. Retrieved from: https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/diy_estate_planning/
  2. Caring.com. (n.d.). 2019 Survey Finds That Most People Believe Having a Will Is Important, but Less Than Half Have One. Retrieved from https://www.caring.com/caregivers/estate-planning/wills-survey/
  3. Carlson, B. (2018, December 2). 7 Reasons It's Time To Update Your Estate Plan. Retrieved from https://www.forbes.com/sites/bobcarlson/2018/12/02/7-reasons-its-time-to-update-your-estate-plan/#27cbfd505ebf
  4. Civics 101: A Podcast. (2019, May 14). Episode: Life Stages – Death. Retrieved from: https://www.civics101podcast.org/civics-101-episodes/death
  5. CNN Money. (n.d.). Ultimate guide to retirement: What kinds of trusts are there? Retrieved from https://money.cnn.com/retirement/guide/estateplanning_trusts.moneymag/index2.htm
  6. Congress.gov. (1995, November 14). H. Rept. 104-336 Charitable Gift Annuity Relief Act of 1995. Retrieved from https://www.congress.gov/congressional-report/104th-congress/house-report/336/1
  7. Ebeling, A. (2018, November 15). IRS Announces Higher 2019 Estate And Gift Tax Limits. Retrieved from https://www.forbes.com/sites/ashleaebeling/2018/11/15/irs-announces-higher-2019-estate-and-gift-tax-limits/#4e80d97d4295
  8. Jones, J. (2016, May 18). Majority in U.S. Do Not Have a Will. Retrieved from https://news.gallup.com/poll/191651/majority-not.aspx
  9. Khalfani-Cox, L. (n.d) Cost-Effective Wills: Online software and ready-made forms make creating your own will a snap. Retrieved from https://www.aarp.org/money/estate-planning/info-03-2011/cost-effective-wills.html
  10. Reeves, J. (2017, January). The Ultimate Guide to Estate Planning. Retrieved from https://www.aarp.org/money/budgeting-saving/info-2016/the-ultimate-guide-to-estate-planning.html
  11. Tax Policy Center. (2018, September 14). T18-0136 - Current Law Distribution of Gross Estate and Net Estate Tax by Size of Gross Estate, 2018. Retrieved from https://www.taxpolicycenter.org/model-estimates/baseline-estate-tax-tables-sep-2018/t18-0136-current-law-distribution-gross-estate