Six Steps to Take for Estate Planning

Besides death and taxes, there are no guarantees in life. The uncertainty can lead to unexpected twists and turns, but you can make things smoother for you and your loved ones with comprehensive estate planning. 

While daunting, estate planning can be made simpler with the right process. Taking the following steps now can help throughout every step of the journey.

Step 1: Create an Inventory

First and foremost, you have to know what exactly will be covered by your estate plan. This means creating a comprehensive list of your assets and debts, including tangible and intangible assets.

Tangible assets in an estate include personal possessions such as:

  • Homes, land, or other real estate
  • Vehicles including cars, motorcycles, or boats
  • Collectibles such as coins, art, antiques, or trading cards

Intangible assets in an estate include:

  • Bank accounts and certificates of deposit
  • Stocks, bonds, and mutual funds
  • Life insurance policies
  • Retirement plans and individual retirement accounts
  • Health savings accounts
  • Business ownership and associated items such as patents, copyright, franchises, goodwill, trademarks, trade names, and software

With your inventory created, estimate the value of your assets to ensure equal distribution among your loved ones. You should store this summary securely in an accessible location, along with any original copies of relevant documents. Provide a copy of this summary to the executor of your will.

Step 2: Decide Between Living Trust or a Will

As you begin the process of estate planning, you’ll likely need to create either a will or a living trust. You might know the legal terms, but each of these methods has their pros and cons. Understanding each will help you make informed decisions.

A will lets you assign your possessions and assets to your beneficiaries, but doesn’t circumvent probate court. This means most assets will still go through the state’s probate procedure before being distributed to your beneficiaries. This is essential for dictating an asset’s rightful owner, but it does make the process more time-consuming. 

This is precisely why professional attorneys recommend a living trust. Unlike wills, a living trust appoints a trustee for asset management and gives them the right to disperse assets.

Factors to consider while choosing between wills and trusts:

Your Location 

Laws regarding estate taxes vary greatly from state to state. One state might offer a specific advantage that another doesn’t. That’s why it’s essential to check your state laws to decide whether a will or living trust is right for you. 


Consider the value of your assets. Generally, states establish a threshold value for assets. Anything below this value can bypass probate court. However, that doesn't mean that lower-valued assets can't benefit from living trusts. 

Be aware of assets that could be harmed by prolonged probate, such as your business. Under such circumstances, a living trust is always the right choice. 


A living trust offers estate tax advantages on federal and state levels. However, this depends on various factors such as state, the value of the estate, federal estate tax, and more. 

Likelihood of Your Estate Being Contested

If you believe there could be a chance that your estate distribution will be contested, a living trust might be a better way to withstand the challenge.

Your Current Financial Situation

Despite various benefits, setting up a living trust might be more expensive compared to writing a will. You can make the choice based on your current financial situation. 

Your Beneficiaries

Because a living trust can hold your assets after your death, it offers a way to provide for young, special needs, or other beneficiaries who you would prefer didn't immediately receive their share of your estate. You may also provide for the care of pets in this way.

Step 3: Make an Advanced Healthcare Directive

An advanced healthcare directive (ADHCD) is a form you fill out to help your family understand how to take care of you in case you are badly hurt or have a serious illness that keeps you from conveying what you want.

There are two main types of advance directives:

  • A Living Will: Also known as a treatment directive, it tells your family and your doctor what treatment you want to receive in emergency conditions. 
  • Medical Power of Attorney: A medical power of attorney is the designated person who is authorized to make end-of-life decisions if you are unable to speak for yourself. 

Vital steps to follow in order to prepare an ADHCD include:

  • Obtain the living will or medical power of attorney form for your state.
  • Choose your health care agent. This can be anyone you trust, including your spouse, close friend, or children.
  • Submit the form and get the documents countersigned by a witness.
  • Announce your decisions to your family, doctor, and health care agent.

An advanced health care directive only comes into effect when you can’t make your own decisions or convey them vocally. 

Step 4: Prepare a Financial Power of Attorney

Where a medical power of attorney appoints someone to make end-of-life decisions on your behalf, its financial counterpart gives someone you trust power over your financial, business, and property matters if you’re unable to do so. 

The person who receives this power is usually called the agent or attorney-in-fact. They’re able to act on your behalf immediately when the situation calls for it. A financial power of attorney can help avoid familial disputes over finances, as the agent holds immediate power over financial decisions and transactions.

Step 5: Designate Specific Beneficiaries

There are very few properties that can skip probate and go directly to your family through your will. Assets such as payable-on-death savings and brokerage accounts will only pass to specific beneficiaries set down in a beneficiary form filled out with your bank or brokerage firm. The same is the case for a 401(c), IRA, and other life insurance policies.

Designating these beneficiaries ahead of time will make the process go more smoothly. When creating your estate plan, present these beneficiary forms to your attorney to ensure the plan covers all assets. Make sure that your beneficiaries' names are correct and up to date. This will help keep them out of the probate process and avoid paying additional money.

Step 6: Keep Things Organized

A large part of what makes estate planning essential is its ability to make life easier for your family and executors. By storing estate information in an accessible, straightforward fashion, you end up saving your loved ones thousands of dollars in legal, accounting, and administration fees. 

There’s a large variety of papers, digital files, and other documents that you should preserve and share with your loved ones. Starting as soon as possible will have a large positive impact down the road. 

Examples of information you should preserve include: 

  • Your will
  • Your trust
  • Information on who holds your power of attorney
  • Bank accounts and credit cards (including card expiration dates, login IDs, and passwords)
  • Mortgages, loans, and unpaid taxes
  • Titles or deeds to any property
  • Insurance policies (information covering life, health, car, and home insurance and others)

Establish a Solid Estate Plan

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