Estate Planning 101: Everything You Need to Know

Oct 27, 2022

If you want your assets and your loved ones protected when you can no longer do it, you’ll need an estate plan. Estate planning helps you designate individuals entitled to your assets in the event of your incapacitation or death. An attorney can guide you to ensure beneficiaries and heirs receive assets with minimal gift taxes, estate taxes, and other tax impacts.

Steps to Estate Planning

Inventory of Your Assets

Often, people think that they may not have enough assets to justify estate planning. Once you look around, you may be surprised by the intangible and tangible assets you have that call for inventory. Tangible assets may include:

Land, homes, and other real estates
Boats, cars, and motorcycles
Collectibles such as art, coins, trading cards, or antiques

Intangible assets may include:

Business ownership
Health savings account
Bonds, stocks, and mutual funds
Certificates of deposit and checking and savings accounts
Life insurance policies
Retirement plans

Once you inventory your intangible and tangible assets, you’re advised to estimate their overall value. Some require outside valuations, including financial account statements and recent home appraisals, to track the worth of your property. If you don’t have external valuations, you’re advised to value your items based on how the heirs will likely value them. It allows you to distribute your possessions equally among your family members.

Review Your Beneficiaries

Your will may spell out your plans but may fail to be all-inclusive. Remember to evaluate your insurance and retirement accounts as they have beneficiary designations that you can track and update if necessary. The beneficiary designations sometimes outweigh what’s highlighted in the will. Ensure you don’t omit any beneficiaries by filling all beneficiary sections. You’re advised to name contingent beneficiaries to act as a backup should your primary beneficiary die before you, and you forget to update your primary beneficiary designation.


Account for the Needs of Your Family


Once you know your state laws, you must devise ways to protect your family and assets after you’re gone. Ensure you have sufficient life insurance based on various factors such as your current lifestyle and whether you’re married. Life insurance is more important, especially if you pay for college tuition bills or you have a child requiring special needs. Ensure you name the guardian for your children and a backup guardian, if need be, when writing your will. Estate planning services minimize the possibility of family court fights that may drain your assets. You must document your wishes for the child’s care and don’t presume that family members will share these ideas.


Evaluate the Value of Professional Help


You should hire an estate tax professional or an attorney to establish a real estate plan that aligns with your project. A package will writing program is sufficient to cater to your needs if your wishes are simple and your estate is small. Such programs account for state-specific requirements and the IRS, and you can update the homemade will if necessary. Consult a tax advisor and an estate lawyer if you have any doubts regarding the process to establish whether you’re on the proper planning path, primarily if you reside in a state with inheritance taxes. You must consider business issues, unique child care concerns, and nonfamilial heirs for a complex estate. A tax professional and an estate attorney allow you to maneuver complicated implications successfully.


Plan to Reassess


Estate planning services change with time, and you must revisit your estate plan when circumstances change. It may include divorce or marriage, loss of loved ones, the birth of a child, being terminated, or securing a new job. Revisit the estate plan routinely to factor in the laws that may have changed. Revising your plan requires extra effort, but it’s crucial as it minimizes estate planning mistakes.

Tools for Estate Planning

According to LegalZoom, at least 77% of American adults state that estate planning is crucial for everyone, regardless of their assets. Below is a list of tools to optimize your estate plan.

Your Will

A will is a legal document drafted by a lawyer to specify when, how, and to whom the assets will be distributed once you die. Here are some items to consider:

Name of the executor who’s tasked with administering and managing your estate following your death
The list of individuals who have a right to your assets
A legal guardian for your kids
Those assets that are passed immediately to heirs and those that’ll pass into trusts to be distributed later
Any organizations or charities that you’d like to donate to following your death

The lawyer will give you total control over your assets, and you must allocate things with detail and consideration. The executor of your estate will submit it to court following your death, and if the listed assets exceed the required threshold, the estate goes through probate. A probate is usually a court-supervised procedure meant to confirm the will’s validity, pay off the deceased’s taxes, repay the deceased’s creditors, and distribute the assets to heirs as listed.

Living Will

A living will is an advanced health care directive that lays out your wishes for life-sustaining medical treatments, including wishes not to receive treatment. You could use the document, for instance, to state whether you may wish to be placed on a respirator when you fail to breathe on your own. The health care power of attorney and your doctors should receive a copy of the completed document, and you can supplement the standard forms with extra information if they fail to cover all your wishes. Follow the proper procedures to ensure the document is notarized before signing it to ensure your wishes are honored following your death.


Trusts enable you to achieve and accomplish more specific and complex financial goals. It’s an arrangement that allows the distribution of the deceased’s assets independently. In estate planning, an asset may be transferred into a trust, which keeps hold of ownership throughout its lifetime. Trusts allow you to significantly minimize estate taxes, transfer your property to respective heirs privately without potential probate delays and costs, benefit a favorite charity, and provide ongoing income to minor children, a spouse, or someone with special needs.

Power of Attorney

A power of attorney document allows you to choose an individual who handles your financial matters if you become incapacitated. Each state has varying rules regarding power of attorney. The person you select becomes active if you’re incapacitated, and the power of attorney is only applied to specific transactions and matters authorized in the document. The financial power of attorneys can’t make medical decisions on behalf of their clients. A power of attorney is applicable during your lifetime but becomes inactive following your death.

Benefits of Estate Planning

It Ensures Proper Distribution of Assets

Estate planning is essential as it allows for accurately distributing a person’s assets. Wills, trusts, and deeds of gift permit you to determine how the beneficiaries will receive assets following your death to minimize future disputations. The court determines how the deceased’s assets will be shared if the person doesn’t have an estate plan

It Protects the Beneficiaries

Estate planning services protect the beneficiaries’ interests by ensuring their shares are preserved and correctly specified. Individuals with minor kids can designate trustees and guardians to oversee the minors’ financial needs. If the children are adults who can’t manage assets or finances, you can create a trust to ensure the children don’t make bad financial decisions.

It Ensures Speedy and Efficient Asset Transfer

Trusts and the deed of gifts are cost-effective and speedy ways of transferring assets to beneficiaries. The asset transfer can be cumbersome without an elaborate estate plan. Estate planning allows you to identify peaceful and cost-effective ways to transfer assets to beneficiaries following your death. The program also specifies how the assets will be distributed and managed by beneficiaries, leaving little room for confusion and speculation. It saves money and time and minimizes disputations.

There are various estate planning methods with distinct features. Select an effective estate plan that’s tax efficient and simple to facilitate a smooth asset transfer to beneficiaries to minimize disputes and prevent uncertainties. Contact Pinnacle Legacy Law for more information about estate planning.


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