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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3 Key Reasons to Use a Trust

Estate planning is plumbing: sophisticated, legal plumbing to move your assets from you to whomever you wish.  An estate planning attorney designs the plumbing based upon your concerns, whether they be incapacity planning, taxes, creditors or other issues.

The two main tools estate planning attorneys use to build these pipes are wills and trusts.  Planners often use trusts as part of the estate plan design because they are versatile.  They solve more problems than a will.  There are many reasons to consider using a trust as opposed to only a will, and here are three key reasons to use a trust:

Understanding Wills vs. Trusts

A will is simple in purpose.  It outlines who gets what and who speaks for you after you are gone.  It requires the probate process to approve it and appoint the person you named to act for you, but otherwise is a straightforward document.

The trust, however, does more.  The trust provides who gets what and who speaks for your stuff after you are gone, without court involvement.  But, it does this through holding your assets or receiving them at death, managing and distributing them according to your instructions, both during your lifetime and after. Unlike a will, a trust offers a private, probate-free path tailored to personal circumstances.

See this article for more:  https://galligan-law.com/will-vs-living-trust-a-quick-and-simple-reference-guide/

You Have a Blended Family

Blended families are like tapestries – intricate, colorful and diverse. However, this beauty can result in complexity when it comes to estate planning. With children, stepchildren and multiple parents involved, a will’s one-size-fits-all approach may unravel the fabric you’ve so carefully woven.

A trust, however, can be the tailor to your tapestry. It allows you to:

  1. Specify exact allocations: Deciding who gets what, when and how.
  2. Protect your children’s inheritance: Ensuring that your children, not just your spouse’s, benefit from your estate.
  3. Avoid unintended consequences: Preventing your assets from unintentionally passing to a new spouse’s children in the event of remarriage.

You Own Property in Multiple States

The second of reason to use a trust is owning property in multiple states.  This is one of the hallmark reasons to use a trust and virtually always leads to using a trust.  Probate in Texas isn’t that bad.  But, if you own property in multiple states, you won’t just probate in Texas, you may have to probate in every state where you own land.  That is far more work for your loved ones, and you will have to anticipate the law of several states, not just Texas.

The trust can own the property in all of those states and by virtue of its ownership, the land can avoid probate.  It allows for:

  1. Centralized management: One entity handling all properties, irrespective of location.
  2. Smoother transition: Bypassing multiple state probate processes.
  3. Cost and time efficiency: Reducing legal fees and administrative delays.

You Value Privacy and Want to Avoid Probate

The last of the 3 key reasons to use a trust is privacy.  Probate, by its nature, is public.  Probate is Latin for “prove it,” so the process involves publicly displaying the will for the world to see.  Parts of it can be private in certain circumstances, but is designed to be public.

A trust, conversely, is the private screening of your final act. It shields your estate from the public eye and sidesteps the time-consuming, often costly, probate process. With a trust you’re not just planning; you’re protecting.  Trusts, short of a dispute, aren’t even filed so the process can remain very private.

Additional Considerations

When it comes to estate planning, one size does not fit all. The decision between a will and a trust should be weighed with:

  • Incapacity planning:  This is reason 3.5.  Trusts allow a trustee to manage property which gives greater control over assets while a loved one is incapacitated.
  • Tax implications: Understanding how each option affects your estate tax-wise.
  • Personalized solutions: Every estate is unique, as is every state, and so should be its plan.
  • Long-Term care planning:  Probate avoidance is a key factor for Medicaid planning

In the tapestry of estate planning, trusts emerge as a nuanced, flexible thread, weaving through the complexities of blended families, multi-state properties and privacy concerns. If these signs resonate with your situation, it might be time to consider a trust.

Remember, the best estate plan is one tailored to your unique story. We encourage you to seek professional estate guidance to navigate these waters.

 

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Estate Planning Mistakes

Making mistakes in your estate planning can torpedo your efforts to protect your family after you die, warns a recent article from Kiplinger, “Common Estate Planning Mistakes.” Everyone benefits from a professionally-made comprehensive estate plan, a process for preparing your legal and financial affairs so assets and possessions are passed on after your death to the people or charities you want.

Not having an estate plan can create trouble for those you love. The biggest estate planning mistake of all is not having an estate plan. After that, there are several others.

Procrastination. Suppose you unexpectedly become incapacitated and don’t have an estate plan. In that case, your family will be left guessing what you would want your medical care to be. They may have to go to court to apply for guardianship so they can pay your bills and keep your household running. Everyone should have documents like a Medical Power of Attorney, a Statutory Durable Power of Attorney (for handing financial matters), a HIPAA Release Form and a Directive to Physicians (Living Will) in place so that you can be taken care of in accordance with your wishes during your incapacity.

Trying to make an estate plan on your own. Unless you’re an experienced estate planning attorney, there’s a lot you could leave out if you attempt a DIY estate plan. If there are serious enough errors, a court could declare your will invalid and it’s as if you never had a will in the first place. The laws of Texas (or the state in which you live) will be used to distribute your assets. It may not be what you had in mind.

Keeping estate planning documents in a safe or safe deposit box. Documents need to be where someone can get them in an emergency or after your passing. Safety deposit boxes often require a court order to be opened on the death of the owner. Make sure that a person you trust (preferably the one you named in your estate planning documents to handle things for you in the event of death or incapacity) knows where these documents are located.

Missing key documents.  Make sure your estate plan includes these documents:

  • Living Trust or Will —This document outlines your final wishes and instructions for distributing your assets and how you want your affairs managed after you die. If you decide on a living trust, you will also need a “pourover will” to transfer assets to your trust at death if you did not take care of this during your lifetime. The Living Trust or Will also names a trustee or an executor to oversee the instructions you leave in the in the document.
  • Beneficiary designations—Any account allowing for beneficiaries, including IRAs, pension plans, investment accounts and insurance policies, will pass directly to named beneficiaries. Be sure that these are up to date.
  • Medical Power of Attorney —Allows another person to make medical decisions for you if you become incapacitated.
  • Funeral instructions—Do you want a traditional burial? Cremation? Leave written instructions for your family outlining your wishes for a funeral or memorial service.

Not Providing for Digital assets. These include websites, cloud storage, social media accounts and cryptocurrency, to name a few. By assigning a digital fiduciary and sharing key information, you help heirs locate assets and avoid identity theft.

Failing to update your plan. Life happens and things change. Someone you’ve named to handle your affairs after you’re gone may be deceased or too sick for the job. Your estate plan needs to reflect these changes in your life and in your family. What you wanted ten years ago may not be what you need now.

Appointing the wrong person as executor or trustee. Don’t feel obligated to name someone as executor or trustee because you don’t want to hurt their feelings. It’s much more important to name an organized person who can get along with the beneficiaries, communicate with them, and keep them informed. It’s also important to name successors in case the first person you name is unable to take on this role. For your peace of mind (and theirs), you should talk with this person before appointing them to this critical role to make sure they are willing to take it on.

Reference: Kiplinger (Dec. 30, 2023) “Common Estate Planning Mistakes”

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