Estate planning is the process of creating plans and legal documents to provide directions about how you would like your assets distributed after your death. Creating a comprehensive estate plan minimizes potential legal disputes, enables you to maximize the amount you leave to your loved ones, and provides financial security. By following the seven estate planning process steps, you and your lawyer can create a comprehensive, tailored plan that fits your life.
At Robbins Estate Law, we focus on guiding individuals and their loved ones through the estate planning process with clarity and compassion. Our firm offers proactive strategies that help clients avoid probate, minimize taxes, and protect assets for future generations. Reach out to learn more about how we can help you.
The 7 Steps Are:
- List your assets and liabilities
- Define your estate planning goals
- Draft essential estate planning documents
- Consider non-probate options
- Update beneficiaries
- Plan for taxes
- Review and update your estate plan
1. List Your Assets and Liabilities
Begin by compiling a detailed inventory list of your assets and liabilities, including:
- Real estate—homes, land, and other properties;
- Financial accounts—bank accounts, investment portfolios, retirement accounts, and life insurance policies;
- Digital assets—cryptocurrencies, digital media files, and email accounts;
- Personal property—vehicles, jewelry, artwork, and other valuable items;
- Business interests—ownership stakes in businesses or partnerships; and
- Debts—mortgages, loans, credit card debts, and other liabilities.
Consider also listing your social media and other online accounts and their passwords.
2. Define Your Estate Planning Goals
Decide what you want your estate plan to accomplish. In general terms, you may focus on:
- Deciding who will inherit specific assets and in what proportions,
- Minimizing taxes,
- Making provisions to care for your medical needs,
- Providing for loved ones,
- Selecting a legal guardian and financial provisions for the care of minor children, and
- Supporting charitable endeavors.
Your lawyer can help you narrow your options and ensure your plan meets your needs.
3. Draft Essential Estate Planning Documents
Creating a comprehensive estate plan requires the proper legal documents created in the right way. Typical estate planning documents include:
- A will,
- One or more trusts, and
- Powers of attorney and living wills.
Together, these documents provide instructions on asset distribution, financial management, and healthcare decisions in the event of incapacity or death.
Wills
A last will and testament specifies how to distribute your assets and appoints an executor to oversee the process. It is a foundational document in any estate plan and helps ensure your wishes are legally recognized and followed.
Trusts
Trusts are essential tools in estate planning, offering flexibility, tax benefits, and asset protection. Trusts may be revocable—allowing you to undo them—or irrevocable. They may also be created during your lifetime (“inter vivos” or “living” trusts) or after your death (“testamentary” trusts).
Revocable living trusts allow you to manage assets while benefiting from the protections of the trust structure. Designated beneficiaries receive these assets after your passing without the need for probate, which can save time, reduce costs, and keep estate matters private.
Testamentary trusts only go into effect after the creator’s death. You may use a testamentary trust to provide assets for minor children, individuals with special needs, or other loved ones who cannot handle a large inheritance immediately.
Other common trusts include:
- Special needs trusts. These trusts provide financial support for disabled loved ones without jeopardizing their eligibility for government benefits.
- Charitable trusts. For those who want to donate to charities, these allow individuals to support charitable organizations while also receiving tax benefits.
- Medicaid trusts. This type of trust protects assets while qualifying for Medicaid long-term care coverage.
- Asset protection trusts. These trusts shield assets from potential creditors and lawsuits.
An experienced lawyer can guide you through tailoring a trust to your unique needs.
Powers of Attorney and Living Wills
Powers of attorney and living wills become active if you become incapacitated. A power of attorney grants a trusted individual the authority to make health-related, financial, or a combination of both decisions on your behalf. A living will outlines what medical treatments you do and do not want to receive if you cannot communicate your wishes.
4. Consider Non-Probate Options
Non-probate assets pass directly to your selected beneficiaries without going through the probate process, which property that passes by will requires. You may want to purchase or create:
- Life insurance policies,
- Retirement accounts,
- Payable-on-death (POD) and transfer-on-death (TOD) accounts, and
- Jointly owned property with rights of survivorship.
Life insurance, in particular, offers flexibility in the estate planning process. It can provide immediate financial support to your beneficiaries, covering estate expenses and debts. Life insurance can also help balance out uneven assets, like an estate that involves only one asset worth more than $100,000, such as a house.
5. Update Beneficiaries
Ensure your existing accounts and policies have up-to-date beneficiary designations. Address all financial accounts that allow you to designate a beneficiary.
6. Plan for Taxes
Depending on how large your estate is, your estate may owe federal estate and gift taxes before your loved ones can receive the property you left for them. To minimize those taxes, implement strategies such as gifting, charitable donations, or setting up specific types of trusts.
7. Review and Update Your Estate Plan
Lives change, and your estate plan should reflect these changes. Review your plan periodically, especially after significant events like:
- Marriage or divorce;
- The birth or adoption of a child; or
- Substantial changes in your financial situation, such as receiving a large inheritance, starting or selling a business, or acquiring valuable real estate.
Updating your estate plan keeps it aligned with your wishes and legal needs. Try to review your estate plan every three to five years and after major life events.
Securing Your Legacy with a Thoughtful Estate Plan
By following these seven estate planning process steps, and with the guidance of a lawyer, you can create a comprehensive estate plan that provides peace of mind for you and financial security for your loved ones. At Robbins Estate Law, we are committed to helping clients navigate the estate planning process with confidence. Our team provides personalized legal guidance, ensuring your estate plan meets your unique goals, taking advantage of asset protection strategies, and complying with the law. Contact Robbins Estate Law today to schedule a consultation.
Kyle Robbins
Kyle Robbins is the founder and sole owner of The Law
Offices of Kyle Robbins. He received his J.D. with honors from the University of Texas School of Law and his B.S. in Food Chemistry and Microbiology from Oklahoma State University.
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