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Where to Start

Planning for the future is a crucial aspect of life, and one often overlooked aspect is estate planning. Crafting a well-thought-out estate plan is not just for the wealthy; it is a responsible and proactive approach that everyone should consider. In this article, we will delve into the essential steps on how to start your estate plan, addressing the key components, potential challenges, and the benefits of taking control of your financial legacy.


Understanding Estate Planning:


Estate planning involves making decisions about how your assets will be managed, preserved, and distributed after your passing. This process is not only about distributing wealth but also about ensuring that your wishes are carried out, minimizing tax liabilities, and providing for the well-being of your loved ones.


1. Assess Your Assets:


The first step in estate planning is to take stock of your assets. This includes everything you own, such as real estate, bank accounts, investments, retirement accounts, insurance policies, and personal belongings. Compile a comprehensive list, including the estimated values of each asset.


2. Identify Your Beneficiaries:


Once you've listed your assets, the next step is to identify your beneficiaries. These are the individuals or organizations that will inherit your assets after your passing. Common beneficiaries include spouses, children, grandchildren, and charitable organizations. Be specific in your designations to avoid confusion or disputes.


3. Choose an Executor:


An executor is responsible for carrying out your wishes as outlined in your will. This person should be trustworthy, organized, and willing to undertake the responsibilities associated with settling an estate. Discuss your choice with the intended executor beforehand to ensure their willingness to take on this role.


4. Create a Will:


A will is a fundamental document in estate planning that outlines how your assets will be distributed upon your death. If you have minor children, it also allows you to appoint a guardian for their care. A pour-over will is a will that pours the assets not already named in the trust into the trust. At this point the trustee can administer your estate.


5. Consider a Living Will and Healthcare Power of Attorney:


In addition to a traditional will, it is important to create a living will and appointing a healthcare power of attorney. A living will outlines your preferences for medical treatments if you are unable to communicate your wishes. A healthcare power of attorney is a person designated to make medical decisions on your behalf if you are incapacitated. You can also designate the terms of how those decisions are made and when. Consider encouraging your young adult children to do this as well. Once your child reaches the age of majority, you no longer play this role by default and you may have to petition the court to be authorized to make these decisions, even if your child is still dependent on you.


6. Establish Trusts:


A trust is a powerful tool in estate planning allowing you to manage and distribute your assets according to your specifications. There are various types of trusts, each serving different purposes. Common trusts include revocable living trusts, irrevocable trusts, and testamentary trusts. Choosing a trustee to administer the trust is important to consider the skills, time, and ability of the person you have chosen. Additionally, many people will choose a corporate trustee, but first find out the requirements and cost associated with these services. Most trust companies do not review a revocable living trust prior to a testator’s passing thus they may not accept the role when the time comes. This can cause delay in administration and potentially additional costs.



7. Review and Update Regularly:


Life is dynamic, and circumstances change. It is crucial to review and update your estate plan regularly. Major life events such as marriage, divorce, the birth of children, or significant financial changes should prompt a review of your plan to ensure it remains aligned with your current intentions. This include reviewing all retirement accounts and the beneficiary designations, as well.


8. Understand Tax Implications:


Estate planning involves considering the tax implications of transferring assets. The laws regarding estate taxes vary by state and year over year. Having a meeting that includes your financial advisor, CPA and your estate attorney (and business attorney if you are a business owner) can help to coordinate the best tax strategy. Strategies such as gifting, establishing trusts, and leveraging tax exemptions can help minimize the tax burden on your estate. In 2023 the annual gifting exclusion is $17,000 per person or $34,000 per couple married filing jointly (MFJ), this adjusts with inflation. The lifetime gift and estate unified credit is $12,920,000 and $25,840,000 respectively; it also adjusts with inflation. This unified credit is slated to revert to $5,000,000 per person and $10,000,000 per MFJ at the end of 2025. It also adjusts for inflation and is anticipated to be approximately $7,000,000 and $14,000,000 respectively in 2026.


9. Communicate Your Intentions:


While estate planning is a personal matter, open communication with your loved ones often essential, where appropriate for the maturity of the family members. Inform your family members and beneficiaries about your intentions and the details of your estate plan. This transparency can help to prevent misunderstandings and potential conflicts in the future.


Challenges and Solutions:


Despite the importance of estate planning, many individuals face challenges that hinder them from taking the necessary steps. Some common challenges include procrastination, lack of information, and the misconception that estate planning is only for the wealthy. To overcome these challenges, consider the following solutions:


1. Overcoming Procrastination:


Procrastination is a common obstacle in estate planning. The idea of contemplating one's mortality can be uncomfortable, leading many to delay the process. To overcome this, start small. Begin by listing your assets, identifying beneficiaries, or researching estate planning basics. Breaking the process into manageable steps can make it less overwhelming.


2. Seeking Professional Guidance:


Estate planning involves complex legal and financial considerations. Many individuals hesitate to start because they lack the expertise to navigate these complexities. Working together with me, your financial advisor and CPA can help to provide the knowledge and support needed to make informed decisions.


3. Tailoring Your Plan to Your Needs:


Some individuals may avoid estate planning because they believe it is a one-size-fits-all process. In reality, estate planning is highly customizable, allowing you to tailor the plan to your unique circumstances and goals. Working with all of your professionals together will ensure that your plan reflects your specific needs and priorities.


Benefits of Estate Planning:


Now that we have explored the steps to initiate your estate plan and addressed potential challenges, let's delve into the numerous benefits of taking proactive measures to secure your financial legacy.


1. Peace of Mind:


One of the primary benefits of estate planning is the peace of mind it provides. Knowing that your assets are organized, your beneficiaries are identified, and your wishes are documented can alleviate stress and uncertainty. Considering the cost of long term care (LTC), adding LTC insurance as part of your estate is one of the best choices a parent can make for their family within the estate plan.


2. Family Harmony:


Clear communication and well-defined estate plans contribute to family harmony. Explicit instructions and transparent discussions about your intentions help prevent conflicts among family members, ensuring a smoother transition of assets.


3. Asset Protection:


Estate planning allows you to implement strategies to protect your assets from potential creditors and legal challenges. Trusts, in particular, can offer a layer of protection for certain assets, ensuring they are distributed according to your wishes.


4. Tax Efficiency:


Proactive estate planning can help minimize tax liabilities on your estate. Strategies such as gifting, establishing trusts, and leveraging tax exemptions, and purchasing life insurance in an Irrevocable Life Insurance Trust (ILIT), can optimize the distribution of assets and reduce the impact of estate taxes.


5. Preservation of Family Values:


Estate planning is not solely about financial assets; it also provides an opportunity to pass on family values, traditions, and legacies. Including personal messages, ethical guidelines, and intentions for charitable giving in your plan ensures that your values endure through generations.


6. Care for Minor Children:


For parents with minor children, estate planning is crucial for appointing guardianship. Clearly outlining your preferences for the care of your children in the event of your passing ensures their well-being and aligns with your parenting values.


This can also apply for those who have pets as their “furry children”; we all know a pet holds special places in our heart so having a plan for them is important too.




Embarking on the journey of estate planning is a responsible and empowering step toward securing your financial legacy and providing for your loved ones. By following the outlined steps, overcoming potential challenges, and understanding the benefits, you can create a comprehensive estate plan that reflects your wishes and ensures a smooth transition of assets.


Remember that estate planning is an ongoing process, and regular reviews are essential to adapt to changing circumstances. Let’s set up an appointment today and navigate the legal and financial complexities together. Ultimately, a well-crafted estate plan is a gift to yourself and your family, providing peace of mind and a legacy that endures through generations.

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