Estate Planning Checklist for 2024

Estate planning is more than writing a will; it’s a plan to manage the legacy you want to pass to your loved ones.  It documents your healthcare preferences, prepares for aging and incapacity and conveys your assets to those you choose.   The National Council on Aging (NCOA) Adviser’s article, “Estate Planning Guide and Checklist for 2024,” offers an overview of what to consider when planning your estate.  There is no perfect checklist as all estate plans should be tailored to the individuals using them, and so what you may want or need could vary, but it’s certainly a good idea of what to consider.

So, this blog will cover an estate planning checklist for 2024.

Understanding Estate Planning

Estate planning organizes your affairs to fulfill your wishes after you pass away. It encompasses decisions about money, property, medical care and care for your beneficiaries. The process includes creating essential documents like wills, trusts, powers of attorney, medical documents and more.  Estate planning provides peace of mind that your wishes are known and respected, benefiting your loved ones, so it is important to consider all of the key documents in the estate planning checklist.

Key Documents in Estate Planning

  • Wills: A legal document that outlines how to distribute assets after your death.
  • Trusts: Contracts that allow a third party, or trustee, to hold property and other assets on behalf of a beneficiary.  These are used for many purposes depending on what kind of trust, such as tax planning or probate avoidance.
  • Powers of Attorney: Legal documents that grant someone else the authority to make decisions on your behalf, such as if you want to delegate to someone or because of your own incapacity.
  • Medical Documents: Documents that state your wishes regarding medical treatment when you cannot communicate your choices.  These, depending on your state, including documents like medical powers of attorney, directive to physicians (living will), HIPAA authorization or similar documents.
  • Disposition of Remains. Some states, such as Texas, have a standalone estate planning document that indicates what your final disposition wishes are, such as cremation or burial, and who is in charge of seeing that through. Other states work these concerns into existing documents.
  • Guardianship for Children.  This isn’t applicable to everyone, but if you have minor children you can name a guardian to care for them should you pass away.  This is often one of the main reasons why young couples even consider estate planning.

Key Takeaways

  • Common Estate Planning Documents: Wills, trusts, financial power of attorney and medical documents are fundamental to estate plans.
  • Everyone Needs a Will, but Consider a Trust: Regardless of the size of your estate, a will is crucial to fulfill your wishes.  What you do beyond that is dependent on your goals and situation, but always consider a trust.  People tend to assume a trust is only for the rich, but trusts are very versatile and help with many client concerns in a way that wills cannot.
  • Review Your Estate Plan Regularly: The original article says update your estate plan regularly, I say review it.  If you don’t review it regularly, it is easy to  forget the details, which makes the estate plan difficult to properly implement and even harder to update.  2024 is an excellent year to review because the estate tax thresholds are changing in 2026, exposing more clients to estate taxes than in the past.

Conclusion

Consider estate planning to be a critical process to protect your assets, provide for beneficiaries and have peace of mind for the future. Follow the estate planning checklist to create your personalized estate plan.

Reference: NCOA Adviser (Aug 21, 2023): Estate Planning Guide and Checklist for 2024.

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What Is a Letter of Instruction?

As a lawyer, I love all of the language in estate planning documents.  I can craft the plan however I need so that the client’s goals are met.  I can address a variety of situations, avoid pitfalls and anticipate changes in circumstances, taxes and law.  I can write clear rules for your loved ones to follow and to benefit from.

I can’t, however, convey your beliefs, wishes, wisdom and thoughts for your loved ones. We can’t always convey the why of your estate plan.  As we say at our firm, estate planning is more than money, it is legacy planning.  A letter of instruction can help you pass your legacy to your loved ones.   See the recent Forbes’ recent article entitled, “Letter Of Instruction: Roadmap To Take This Important Estate Planning Step.” for more.

Some letters of instruction are akin to ethical wills which may provide your loves ones with your wishes and thoughts.  Other letters of instruction may serve other purposes. Therefore, you might consider drafting several letters of instruction. One might be a guide for a trusted friend to handle financial and other matters if you have an emergency. A second might be to the person serving as a health care agent who will make medical decisions for you if you can’t do so.  A third might be to a trustee of a trust for your grandchild urging them to prioritize spending on education, starting a business and so on.

Mary wrote an excellent article on ethical wills which you can find here for more:  https://galligan-law.com/estate-planning-attorneys-recommend-that-clients-consider-writing-an-ethical-will-or-legacy-letter/

It is, however, very important to be careful when writing any letter of instruction to avoid conflicts with estate planning documents.  The estate plan has legal effect we don’t want to disturb.  Instead, letters of instruction should be worded in a way that make them merely an expression of wishes and information  and not a change to your estate planning documents.  To that end, you should share a letter of instruction with your estate planning lawyer to ensure the estate plan and letter won’t conflict or lead to a fight in your estate.

Here are some suggested categories you might include in one or all of your letters of instruction.

ICE – In Case of Emergency. A vital purpose of a letter of instruction is to tell someone (e.g., the agent under your power of attorney for financial matters and the agent under your health proxy for medical decision-making) your wishes and critical information. For both your financial and health care ICE letters, you should list the location of the original legal documents.

ICE – In Case of Financial Emergency. For your financial ICE letter, you should indicate where key financial data is maintained and how to access it. In addition, list the bills to be paid and creditor information.

ICE – In Case of Health Care Emergency. For your health care ICE letter, you should provide key health information and indicate where health records are maintained. It is important to add the contact information for healthcare professionals and any particular health challenges. Your health insurance information should also be provided.

Key Family, Advisers, and Other People. Having a list of positions, names and contact information is helpful for everyone to see, so that they know if certain actions they might have to take may be in the purview of someone else. The listing should be by categories that make sense for you. Some of the positions/relationships you might list include the following:

  • Professional Advisers, such as an estate planning attorney, CPA, investment consultant and banker
  • Family; and
  • Trustees of trusts, the executor under your will, and powers of attorney agents

Reference: Forbes (June 18, 2023) “Letter Of Instruction: Roadmap To Take This Important Estate Planning Step”

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Top Five Mistakes to Avoid When Passing your Legacy

Many families think of the transfer of their wealth and values from generation to generation as an important legacy to their loved ones. A report from Cerulli Associates says approximately $84 trillion will be passed from today’s older generation to heirs by 2042.

As a firm that focuses on legacy planning, we recognize how important for this legacy to succeed.  In order to successfully transfer legacy to the next generation, families and their loved ones should consider the pointers in a recent article from yahoo! finance, “Don’t Make These 5 Mistakes When Passing Down Generational Wealth to Your Family.”

This is by no means an exhaustive list and all situations are different, but consider each in how it affects your legacy to your loved ones.

  1. Prepare beneficiaries for their inheritance. I’m not always a fan of this as sometimes it creates an unhealthy expectation, but considering speak with your loved ones about how their inheritance might change their lives. Educate them early on about personal finance, and introduce them to your advisors, including your estate planning attorney, financial advisor, and CPA. This is especially true with natural heirs, such as children or grandchildren.
  2. Teach heirs how to be financially independent. This is more specifically a family problem, but problems can occur if children expect to receive an inheritance and don’t think they’ll need to work. This could get in the way of their personal and professional growth, and unfortunately is almost never true. A recent study showed that the average time it took to spend an inheritance, regardless of its value, is 4.5 years. You want them to know how to support themselves and the value of money earned, while benefiting from the legacy you leave them.
  3. Make sure to diversify your portfolio. When did you last increase your 401(k) contributions or diversify your portfolio? Be mindful of your investments. You don’t want to overestimate the value of your wealth or leave your children with an out-of-date investment portfolio, or have it shrink due to mismanagement.
  4. Involve your beneficiary in the family business. If your legacy includes a family business, you need to consider the importance of ensuring that whomever you wish to leave it to is fully involved in how the business operates and its financial needs and goals. If you simply toss them into the business without completely understanding it, the transition may not work, or in some cases, lead to catastrophe. As a result, your years of hard work could disappear quickly. A succession plan should be in place, so everyone knows what is expected of them.
  5. Don’t neglect your estate planning. Sit down with an estate planning attorney and create a comprehensive estate plan, including a last will and testament, power of attorney, health care power of attorney, living will, and any trusts needed to pass wealth to the next generation. Do this long before you expect it to be needed. A major mistake is people want to do the first estate plan when they are 85, and aren’t willing to accept that they might not be capable, or that incapacity will be an issue long before.  If you fail to create an estate plan, you may be left with a mess for your heirs (next of kin, not beneficiaries you choose) to figure out. It could take years before they receive the assets you want them to inherit.

For more ideas on this topic, see this article on wealth transfer and legacy:  https://galligan-law.com/common-wealth-transfer-mistakes/

Reference: yahoo! finance (June 5, 2023) “Don’t Make These 5 Mistakes When Passing Down Generational Wealth to Your Family”

 

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