Estate Planning Checklist: A Guide for Families and Family-Owned Businesses

Posting by Joel C. Susco, CPA

Often when we give a gift we look at the recipient to watch his/her expression. We hope to see eyes widen with delight and a smile form as he/she open that especially chosen item. We look to the recipient to be happy with our choice.

One of the best gifts you can leave your family is an estate that is well-organized, with clear instructions on what is to happen upon your death. To aid in that process, we have compiled a list of those items to help you get started on the right track:

Estate Planning Checklist

  • Make or update your will. A will directs what happens to your money and possessions when you die and indicates who should become guardian of your minor children. Without a will, state law will dictate what happens regarding assets and childcare.
  • Create a living will or medical directive. This will give guidance for any medical decisions that need to be made on your behalf.
  • Draft a durable power of attorney. These individual documents will allow you to appoint someone to represent you financially, personally, and in some instances, for healthcare decisions.
  • Write a letter of instruction which will provide your survivors with a roadmap of your final wishes such as who to contact, what funeral arrangements you prefer and where important documents are kept. This is often kept with your final will.
  • Calculate your net worth, encompassing all of your assets (including any life insurance proceeds) and the debts which you are liable. It is helpful to meet with a financial planner to assist with the creation of your personal balance sheet. This will allow you to assess if you have sufficient life insurance protection to cover any outstanding debt. In addition, speak with a tax specialist to help minimize or eliminate the impact of potential federal and state estate taxes.
  • Establish a trust. A trust is a legal entity that holds property designated by you for the benefit of you or others, such as minor children. Your meetings with a financial planner and tax specialist will determine if a trust is an appropriate estate planning vehicle to pursue. There are a number of different trust structures; your advisor should help you determine which option(s) best fit your financial and family situation.
  • Address exit planning. Discussions with your advisors can also provide for arrangements for an orderly transfer of business assets. This can occur through legal agreements and life insurance on business partners.
  • Consider buying other types of insurance. There are three main types of insurance, aside from life insurance, which help protect and stretch your assets while you are living: long-term care, which helps cover the cost of long-term health care in your home or care facility; major medical to protect against rising costs of medical care; and disability insurance, which helps protect your income if you no longer can work.
  • Review your pension plan and survivor benefits, and ensure that you are properly informed on what is to occur upon your death and that it is aligns with your wishes.
  • Review your IRA, 401(k) and other retirement plans for proper beneficiary designations and benefits. Will the accounts be transferred in accordance with your understanding of the plans?
  • Compile a listing of government benefits currently being received, such as pensions, social security, and military benefits.
  • Compile a listing of financial assets and debts. This could include bank and investment accounts, insurance policies, mortgages, credit cards, car loans and other important documents. Account numbers, branch locations, and advisor contacts are helpful items to include in this summary.
  • Provide a listing of valuable documents and the location of the documents, such as deeds, titles to property, birth and marriage certificates, prior tax documents and special memberships.

Once you have compiled the items listed above it is essential to review your plans with your loved ones and the executor of your will, so that they can carry out your wishes. If business assets are involved, communication is especially important for succession and exit planning in order to pave the way for your successor and ease any family conflicts or tensions.

Of the many gifts you give your family, a properly organized estate is one of the most important. Ease potential future stress and ensure your loved ones are taken care of by planning ahead now to leave your family a welcome gift, as well as your own lasting legacy.

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