Estate Planning. UGHHHH. Are we right or is that how you’re feeling thinking about it? Estate planning is one of those things that no one LIKES to talk about, but everyone SHOULD be talking about. It’s difficult to talk about because it means talking about our own death, while we’re still alive. The reality is, we are all going to die. *GASP* I know, it’s mind blowing, but that’s the cold hard truth. So let’s talk about it. Ready to take the first step towards planning for life after you’re gone? Here are 10 things to ask yourself before you start estate planning.
#1 What real estate do I own?
When thinking about estate planning, we tend to think about things we own, the most obvious being real estate holdings. People often like to transfer their real estate into a trust in order to avoid costly probate after death.
If you still have a mortgage on your property at the time of wanting to create an estate plan, it’s no big deal, simply reach out to your bank and see if they have a problem putting the property into your revocable trust. In most instances, this shouldn’t be an issue, and most banks are willing to work with lawyers to ensure your home is included in the trust.
#2 How do I own that property? Does it matter?
Whether you have personal or commercial real estate property, there are different ways you may be owning it. Step back and think about it, are you the single owner of the property? Do you own it as joint tenants? All of these things come into play when wanting to plan what to do with your property, and it can impact how you handle it in your trust and estate planning process.
#3 What retirement accounts do I have?
People often think about retirement accounts with estate planning but the good news is that you don’t have to! If you have a retirement account they automatically go onto your beneficiaries. If you’re updating an existing plan, it’s also a good idea to check in with who your beneficiaries are. As life evolves, the people you want listed as a beneficiary may change and evolve as well.
#4 What life insurance policies do I have?
When planning your estate, it’s always important to think about the little details but it’s also important to remember that some of these things will not be included, and already have their own beneficiaries. Similar to your retirement accounts, your life insurance policies will also have beneficiaries so the policies live outside of your estate plan.
Again, anytime you’re updating your estate plan, you should also make sure to look at who your beneficiaries are for appropriate accounts, including your life insurance. Maybe your relationship with your children have changed, maybe you have a new wife/husband, etc.; don’t let your policies go to the wrong people. It’s always a good idea to update and check who your beneficiaries are – based on life changes and growth.
#5 What investment accounts do I have?
It’s not only important to think about what investment accounts you have, but also how they’re set-up. If you have an investment account, like an IRA, you most likely have already set a beneficiary up. If that’s the case, then there’s no need to include it in your estate plan. It’s already set-up to go to whom you want it to if something should happen to you.
If you’re young and have no significant others/family etc. when you start investing you may not have set any beneficiaries up. As you grow and life changes, you might find yourself with a partner, some kids, and a whole new family to think about leaving your accounts to. If you never set up a beneficiary, make sure that you do! There’s no time like the present to make that happen.
However, not every investment account has beneficiaries. For example, if you own 2,000 shares of Google stock, that’s something you want to include in your estate plan.
Knowing what type of investment accounts you have, and how they are setup, is important when working on your estate plan.
#6 If you have minor children, who do you want to raise them in the event of you/your partner’s death?
It’s something that no one ever wants to think about, the idea of someone other than you or your partner raising your children, but it’s one of the first things anyone should consider after having a child. Even before having children, if you’re thinking about having children, it’s a good idea to have a conversation with your partner about who you would want to raise your child. Prepare for the unexpected. Always.
Are you a new parent? Check out these 5 steps to Estate Planning for new parents and if you’re interested, dive more into why new parents need to have an estate plan.
Not knowing who you want to raise your child prior to death could mean custody battles, someone you don’t want raising your child, and a slew of other issues that may arise. Plan for your children’s future now, by knowing who you want to raise them in case of your untimely death. No one wants their kid getting stuck with THAT aunt or uncle. Am I right or am I right? As hard as it may be, think long and hard about who you want to raise your children – think about religion, politics, social issues, hobbies, love, lifestyles etc. etc.
Decide that now, so no one has to figure that out later. Your loved ones will have enough grief to be dealing with.
#7 Who do you want making medical decisions for you?
Do you have just one person you love that has different beliefs, ideologies, thoughts, religious views etc. from you? If you answered yes to just one of these, that’s the exact reason why it’s important to think about who you want to make medical decisions for you, and to create a plan for that now.
The last thing you want is for your Aunt Sally with alternative religious or societal beliefs to be the one to decide to pull the plug or not. As much as your life is yours to live, you likely want the end of your life to be made with your choices, and so it’s essential that you think about who you want making medical decisions for you. Not just one person, but two. Medical decisions need an alternative in case your first choice isn’t available.
A medical power of attorney helps ensure that whomever is responsible for you, was someone you picked. This helps to ensure that the choices you make are ones that you would have made for yourself.
#8 Who do you want making legal decisions for you?
Just like you don’t want crazy Aunt Sally making choices about your children or health for you, you likely don’t want her to be making any legal decisions either. Life is full of the unexpected so you might anticipate that your partner would automatically default on taking care of these things but what happens if something happens to both of you, then what?
All things in life should have a plan, a backup plan, and a backup plan for their backup plan. Think about who you want and TRUST to make legal decisions for you, if the time comes. That’s the person you should put down, otherwise, you might end up with someone that you love, but don’t trust, for those kinds of decisions.
#9 Do you want to specifically disinherit anyone?
Do you have an estranged child? Estranged parent? Someone who would inherit things if you didn’t otherwise disinherit them? If the answer is yes, then you absolutely need to consider this person when creating an estate plan. Without estate plans, your estate and assets will need to go through probate, which is not what one would call a joyful experience.
Decide who you want to inherit what, while you’re alive, so that your loved ones and family don’t have to spend their time and energy on it after you’ve left them. Let them focus on things that matter – their grief for you, and their love for each other.
#10 Who do you want to distribute your estate?
There are a lot of things to think about before starting the Estate Planning process, the last thing on this list, but perhaps one of the most important, is thinking about who you want to be the executor of your estate. The executor of your estate will help ensure that your wishes are followed. The executor does much more than distribute assets and your estate though, they’re responsible for paying off any debts or taxes that may still be owed. After that, they’re here to help ensure your estate gets distributed properly.
I know how overwhelming creating and thinking about an estate plan can be. I hope that these 10 things have helped you get to a starting point with things you’re going to want to have thought about prior to beginning the estate planning process. Having an idea of who you want to be an executor, who you want to be responsible for your children, who might handle your health decisions, these are all big choices that impact those you love.
Remember, nothing in your estate plan is permanent, relationships and life evolves, and so can your estate plan, but it is a great idea to have one in place. The goal here is to plan for the unexpected, you never know what may happen so let’s work together and create a plan!
Have questions? Need help creating an estate plan? Jessica Henman is Chico’s favorite lawyer and here to help you every step of the way.
Jessica Henman, Attorney at Law, is based in Chico, California (born and raised in fact) and is here to help out anyone in California. For more assistance and custom estate plans give me a call at (530) 520-3109 or email to set-up a time to talk about getting the right estate plan, trust, wills, and other documents for your family. Whether you’re a family with young kids or a family with grown ones, I can help you every step of the way.
I look forward to connecting with you! I’m here to help answer any questions you may have regarding estate planning. Plan for the unexpected today!