5 Simple Steps For Your Estate Planning Checklist

Estate planning is simply preparing your assets to be managed the way you want them to in the event of your death. Not always the easiest thing to discuss, but it’s essential. And with an estate planning checklist, you can make sure the planning includes the allocation of your assets to heirs and the settlement of estate taxes. Most estate plans are set up with the help of an attorney experienced in estate law.

estate planning checklist

“A very rich person should leave his kids enough to do anything, but not enough to do nothing.”

-Warren Buffet, as quoted in a September 29, 1986 interview with Fortune.

Accenture estimates that boomer parents will distribute $30 trillion to their millennial children over the next 30-40 years. It would appear that this topic would inspire lively inter-generational conversations, but the contrary is true.

Martin Halbfinger, UBS Wealth Management’s private wealth manager, lists four reasons why families might be reluctant to talk about the $30 trillion elephant in their room.

  • Most people avoid the unpleasant topic of death.
  • Some parents are reluctant to disclose their financial affairs to their children or other heirs.
  • Parents don’t want children to know what might happen, as it could cause friction between siblings.
  • They are worried about their children’s money management and are hesitant to set expectations.

Most estate planning checklists involve the same elements: a will and one or more trusts. The assignment of an executor is also required. These are some ideas to help you put the pieces together for your loved ones.

1. Be Sure to Meet Your Estate Planning Needs First

The flight attendant reviews the emergency procedures before commercial aircraft take off. We are told to take our masks off if the cabin is under pressure or if the oxygen masks fall from the ceiling. This is because you cannot properly help another person until you have seen your own needs.

This advice is also applicable to estates. You must first provide for your own long-term health and living expenses. Even then, it is important to be careful before you give certain assets or dollars to heirs. It is possible that your longevity and health care needs may be greater than you anticipate.

Parents might be tempted not to take care of their own needs but instead, focus on their children’s. Parents may be tempted to neglect their own needs in favor of their children.

Your independence is the greatest gift you can give to your children. Here are some ways you can do this:

  • You can use investments that are not in the stock market.
  • diversifying into different asset classes;
  • Do not wait until you retire to start creating cash flow from investments
  • Owning one or more properties to increase equity in real estate assets
  • Permanent life insurance with cash value that can be borrowed against. This strategy works especially well with intergenerational policies that you own and control.

It is important to not make promises that you cannot keep. Your assets will always be yours to use for as long as you require them. You may need additional income because of illness or other circumstances.

2. An Estate Planning Checklist Communicates Clearly and Openly With Your Heirs. 

Even though parents and children may be reluctant to talk about the inevitable, it is important that they communicate clearly with each other. Mark Accettura, an elder law attorney in Detroit, says that although “estate planning” is not democratic, parents should allow their heirs to have an understanding of their financial situation.

Mary Gresham, Atlanta Financial Psychologist is a strong advocate for having a family meeting to discuss the matter. These meetings can be a great way to go over the details of where important documents should be kept, and who to contact in case you need them. We also recommend TheTorch.com. This is a great time to discuss your plans and answer any questions that beneficiaries may have about the distribution of assets.

It doesn’t matter how good-intentioned you may be, don’t set unrealistic expectations. Although it is important to discuss money with your children, it’s best not to lead them to believe that all assets will be theirs one day.

These discussions can be awkward, but it is not as bad as the explosiveness of unexpected surprises that await you. Make sure to share the reasoning behind your decisions on your estate planning checklist with your children, and invite them for feedback.

3. Fairness is a Key Principle in the Distribution of Your Estate. 

Mark Accettura says, “If your goal is to minimize fighting, leave it the equal you can.” This applies not only to assets but also to determine who will be responsible for settling your estate. Accettura suggests that everyone with the ability should be given a limited role.

A common scenario is that an adult child has financial difficulties and receives occasional or regular help from their parents. This kind of assistance, whether it is through your estate or in your lifetime, can prove counterproductive. Thomas Stanley calls such coddling “Economic Outpatient care (EOC)” in Millionaire women Next Door.

Stanley’s research led him to conclude, after a while, that such gifts make the recipients less capable of providing for themselves. This favoritism can also lead to resentment, and it does little to foster healthy siblings relationships. The inequitable distributions of your estate can cause serious damage to relationships.

The estate will be divided in a proportionately larger amount to those who are able to receive the most support while their parents are still alive. For their success, the successful children receive negative reinforcement.

No matter what your concerns may be, it is important to take into account the family dynamics. These issues may be discussed in a family meeting, or privately with each of your adult children.

4. Be a Role Model for Financial Success and Leave a Legacy That Inspires Financial Self-Confidence.

You don’t have to wait for a family meeting before you involve your children financial planning. When your children are young, it is the best time to teach them fiscal responsibility. If they are older, then “now” would be the best time to start teaching fiscal responsibility.

There are many ways you can include your children in the financial planning of your family.

  • Children should be involved in the planning of family vacations, schooling, and other expenses.
  • Regular meetings should be held about the household budget. This will involve the entire family to raise awareness of what things cost and how they can help (e.g. by managing utility costs together).
  • Learn from others as you manage your savings, investments, cash flow, property purchases, and growing a business.
  • As a family bank, you might consider using one or more whole-life policies. Family members can help determine the criteria for family loans. They can also use this instrument to buy their cars, start a business, or pay for graduate school.

You can instill a positive, open-minded, and practical attitude towards finances if you communicate with your children regularly about money matters. Your children’s best financial legacy is to empower them to create their own long-lasting wealth.

5. Last But Not Least, Don’t Wait!

Many people believe they have everything in the world, when in reality the reverse may be true. Some people believe they don’t have to do “estate plan” because they have small assets. Others procrastinate even though they know they should address their legacy immediately.

Legacy planning is the opposite of depressing and morbid. It’s an opportunity to make a difference.

  • How you will show your love to the people who are most important to you
  • Don’t forget to support charities and non-profits that reflect your values
  • You can rest assured knowing this is taken care of.

To discuss your estate planning checklist and these ideas, contact your Wealth in Overdrive Advisor. If you need an advisor to help you create a strategy to generate sustainable wealth for the future generations, please contact us.