How To Create A Solid Estate Plan

Estate planning isn’t something you should leave before things are dire. Developing an estate plan should be done as early as possible to ensure that you have something in place if an unforeseeable event happens. Some companies provide estate planning solutions, or you can consult your personal lawyer for advice on drafting up the documents to put your estate in order. However, before you get to that point, you should have things ordered and categorized to make life easier for you once you have to distribute those assets. Here, we’ll look at the necessary steps you’ll need to go through to build a concrete estate plan.

Step 1: Net Worth Calculations

How much are you worth? We’re not talking about the chemicals that make up your body. Investopedia helpfully defines net worth as the value of an individual’s assets less their liabilities. You don’t need a detailed accountant’s report on your net worth. For a rough estimate, you can look at the value of your investments, personal property, life insurance, real estate, oil and mineral rights, retirement plans, business interests, and any outstanding money owed to you. These make up the bulk of your assets. Liabilities may include things like loans, mortgages, and any money you owe to individuals or institutions. Taxes on your estate after you die may also be a concern and should count towards your liability calculations as well. The attorneys at Giles & Robinson, P.A. can make sure your wealth preservation focuses on minimizing your liability exposure and protecting your wealth.

Step 2: Assess Family Needs

When you pass on, your family will need to be taken care of. One of the most challenging processes to undergo after an estate-holder dies is probate. The Balance mentions that probate can be a lengthy process that constitutes several steps. The cost of probate can be high as well, but it’s relatively easy to sidestep the process. If you have many businesses or several large inheritances to handoff, you will need an estate plan to distribute these proceeds. Having an executor of your estate in line with your estate plan ensures that the state doesn’t get involved via a judge and that your assets go exactly where you want them to go.

Even if you don’t have a massive net worth, you should still have an estate plan in place. Your family will need to have access to funds during and after probate. Their standard of life will need to continue, and you can ensure that with intelligent estate planning. This step allows you to look at family expenditure and where your income comes from. You may be able to assign one or more of your children to positions in companies to ensure that they continue management in your stead. Alternatively, you can set up trusts that will provide for them to follow their own paths.

Step 3: Hire a Qualified Estate Planning Attorney

Once you’ve categorized your assets, you’re ready to call in an expert lawyer to help you draft up the documents for your estate plan. It’s technically possible to get these documents drafted yourself. You can even leverage a family member to help you sort out these details and save you some money. The issue here is that involving a family member (especially one who may stand to benefit from your demise) creates a conflict of interest. Doing it yourself reduces the level of professionalism in your estate plan and increases the event of your estate plan being challenged in a court of law.

The only way you can be sure of your estate plan’s security is to hire a professional and qualified estate planning attorney. The attorney is just one part of a team. Ideally, you should already have several professionals dealing with your assets, such as an accountant, insurance agent, banker, etc. Each of these will be intimately aware of the details of your assets and where they’re held, and their input will be necessary to help the lawyer develop a thorough estate plan. Once you’ve hired the professional and put together your team, the next step is determining the type of plan you’d like.

Step 4: Category of Plan

When it comes to developing estate plans, there are two distinct types:

o   Revocable Living Trusts: Forbes notes that a revocable living trust is made while an individual is still alive and can be adjusted as they see fit throughout the course of their lifetime.

o   Last Will and Testament: Commonly termed a will, this document delineates your final wishes regarding your assets and is only valid once you die.

Revocable living trusts are useful if you want to avoid probate since you can include clauses that transfer the control of assets to your dependents immediately upon death. Other trusts can do the same, but they tend to be less flexible in their utility. Wills are typically what you want to use to delineate where your assets go when you die, but the will and everything it mentions is subject to the probate process. If you have any queries regarding the process, do consult a probate attorney as the procedure can be quite tedious.

Step 5: Select Your Fiduciaries Carefully

Estate planning also comes with the stipulation that you need to choose the right people to put into positions of trust. Not everyone who pretends to be your friend is, and you need to discern who will do right by you and your family. This consideration includes the executor for your will, and the financial controller for any trusts you may have. If you have one or more powers of attorney granted to individuals, they should be people that you rely on, and that understand your decision-making process.  Fiduciaries are necessary for estate planning, and having good people around you helps with selection.

Step 6: Constant Review

Your assets will change from month to month, so it’s a good idea to review your estate plan often. Ideally, your reviews should take place, depending on how often your assets need to be updated. If you do a lot of business with assets changing hands, sooner is preferable to later. These reviews are to ensure that you plan for any eventuality. Gift tax laws, inheritance laws, and estate laws all change yearly, and you may need to pivot your estate plan to deal with these changes.

Brett Sartorial

Brett is a business journalist with a focus on corporate strategy and leadership. With over 15 years of experience covering the corporate world, Brett has a reputation for being a knowledgeable, analytical and insightful journalist. He has a deep understanding of the business strategies and leadership principles that drive the world's most successful companies, and is able to explain them in a clear and compelling way. Throughout his career, Brett has interviewed some of the most influential business leaders and has covered major business events such as the World Economic Forum and the Davos. He is also a regular contributor to leading business publications and has won several awards for his work.