Estate Planning 101

“The secret of getting ahead is getting started.”

–Mark Twain, American author

While many find it anxiety-provoking to think about, creating a legally binding plan to distribute your assets after your death ultimately provides you with peace of mind.  You can rest easy knowing that your wishes will be carried out as you have requested.  Some folks prefer a DIY, or do-it-yourself approach, but this may not be the best option for everyone.  One reason is that each state has its own set of laws and requirements.  We urge our clients to consult with an estate planning attorney to ensure their documents are correctly prepared, in order to avoid costly and time-consuming missteps. 

While we encourage you to sit down with a legal professional, we also want to provide some general guidelines on Estate Planning 101 for you to think through independently. 

Set your goals and priorities

Will you be providing for children under 18? Or are your beneficiaries young adults, older adults, relatives, or charities? Exactly how might you provide for your children?  Options you may consider include a trust and/or a will.

Trusts provide control over the distribution of assets and a level of privacy.  A trust is a fiduciary arrangement that allows a trustee to hold assets on behalf of a beneficiary or beneficiaries.  Trusts can be arranged in many ways, to specify exactly how and when the assets pass to the heirs.

A will is a legal document that takes effect upon your death. It outlines your wishes, including provisions for guardianship of your minor children.

Take stock of your possessions

It’s important to create an inventory of your assets, including bank accounts, insurance policies, investment accounts, and personal belongings.

Have the difficult conversations

If you were to pass away suddenly, do your loved ones have access to important documents, financial statements, etc.?  It is important to inform your loved ones about the location of your will and the legal professionals who will handle the process.  In other words, it’s important to ensure that your heirs won’t be forced to embark on an unexpected scavenger hunt in the event of your unexpected passing.

Choose the right executor or trustee

Select a trustworthy individual or institution to act on your behalf.  You need someone dependable, trustworthy, organized, fair, and financially savvy. Identifying the best candidate can be made easier if you focus on these important attributes.

Designate and regularly update your beneficiaries

It’s common to list a beneficiary or beneficiaries for an IRA and life insurance policy.  However, it’s crucial to ensure that your designated beneficiaries align with your will.  For instance, if the will you drafted last year names Bob as the recipient of your IRA, but the beneficiary listed on the account paperwork 15 years ago is Sally, then Sally will be the recipient of the assets.

Prepare for medical decisions

In Tennessee, there are two forms that you can complete to document your wishes for medical care.  A Medical Power of Attorney, now referred to as an Appointment of Health Care Agent, allows you to name another person to make healthcare decisions for you if you are unable to make them for yourself.  A Living Will, now known as an Advance Care Plan, is a document that tells your doctor how you want to be treated if you are terminally ill or permanently unconscious. 

Update your estate plan regularly

Life is full of unexpected turns.  Milestone events such as marriage, divorce, births, and deaths can have a significant impact on your wishes and can even create gaps in your plan.  In addition, charities that once held significance for you may not be a priority for you anymore.  Therefore, it is crucial to periodically review and make necessary adjustments to your plan.