A retired couple dance together in the kitchen after finalizing their estate planning documents
A retired couple dance together in the kitchen after finalizing their estate planning documents

The 5-Step Guide to Estate Planning

An easy-to-follow guide that will give you an organized approach to estate planning and making informed decisions along the way.

Data from a Gallup Poll currently shows that less than half of U.S. adults have a will, with the percentage increasing based on factors such as age, income, and education. Despite the numbers, know that some form of estate planning is essential for everyone. The planning process allows you to determine what happens to your assets and can provide you and your family’s protection in cases of medical emergency and end-of-life care. However, you may feel overwhelmed with where to begin.

Our 5-step guide on estate planning will give you a thorough yet easy-to-follow overview of the process. You’ll be able to take what you learn here and translate it into building an estate plan that gives you peace of mind. Let’s begin.

Key takeaways

  • Estate planning begins with understanding the current state of your finances and putting together the right team of skilled professionals.
  • Understanding your goals will help you choose the structure for your plan and other critical estate planning decisions.
  • After finalizing your estate plan, be sure to review it from time to time for any life changes that may require an update to your plan.

Identify and Organize Your Financial Affairs

No matter your age or net worth, the first step in any financial, retirement, or estate planning process is to take a moment to organize your affairs. This means identifying, collecting, and reviewing the current state of your finances. Compiling your financial information upfront helps you identify questions for your estate planning team and allows them to advise you with the most recent and accurate information possible.

Take Account of Your Assets and Liabilities

Start by listing out all your assets and liabilities along with their values to get an approximation of your net worth. Your assets and liabilities will likely include one or more of the following:

  • Bank accounts (checking, savings, certificates of deposit “CD’s,” etc.)
  • Investment and retirement accounts such as an IRA, pension, or 401(k)
    • Don’t forget to look for old 401(k) accounts with prior employers
  • Insurance policies (e.g., life insurance, long-term health insurance, etc.)
  • Real estate (personal residence, vacation home, rental properties, etc.)
  • Business ownership interests
  • Royalty interests
  • Cryptocurrencies
  • Mortgages
  • Loans (business, car, student, etc.)

Also, consider if any of your assets or liabilities are subject to change in the short term or while you are in the process of creating your estate plan. For example, buying or selling a piece of real estate. Changes in your assets could impact the estate planning options at your disposal.

Assemble Your Team of Estate Planning and Finance Professionals

Estate planning is a collaborative effort requiring input and personalized attention from several key parties you trust. While everyone’s estate planning team may look different, this group of professionals may include your:

  • CPA
  • Wealth management advisor
  • Fiduciary officer
  • Estate planning attorney
  • Business advisor

Each of these professionals plays a significant role in creating a holistic estate plan that is legally sufficient, consistent, and that addresses your goals. The members of your team must communicate and work together to provide you with estate planning guidance as it relates to their areas of expertise.

Consider Your Legacy and Your Estate Planning Goals

With your estate planning team assembled, your next step is to consider what you want your plan to accomplish. Estate planning often provides a unique blend of financial and personal objectives that require a delicate balance of emotion and logic in decision-making. Carefully considering and prioritizing your various goals will help you create a plan that best reflects your intent with your family, finances, and legacy.

General goals that individuals and families may find relevant in driving their estate planning are:

  • Protecting themselves and their assets in the event of a medical emergency, incapacity, and end of life care
  • Ensuring their spouse, children, and loved ones have financial security
  • Reducing and planning for any potential state or federal estate tax liability
  • Succession planning for a family business
  • Shielding assets from certain liabilities (e.g., the creditors of their beneficiaries)
  • Building and preserving generational wealth by controlling its disposition to beneficiaries over time
  • Minimizing the risk of conflict amongst heirs, beneficiaries, and others after death

Understanding your goals before creating your estate plan will help you make informed decisions about the structure of your plan (i.e., who receives what assets and when).

Execute Your Estate Plan

After considering your goals, it will be time to execute your estate plan. This step will look slightly different for everyone depending on their assets, family, and plan but will generally involve some combination of the following documents, in addition to others:

  • Will (including naming a guardian for minor children)
  • Trust(s) that may be revocable or irrevocable in nature
  • Advanced medical directive (for healthcare decisions)
  • Power of attorney (for financial and non healthcare decisions)

Deciding between a trust and a will? Both have benefits in securing your financial legacy. Read more about what is right for you.

Select Your Representatives and other Fiduciary Positions

Most estate planning tools (e.g., a will, trust, power of attorney, etc.) require the help of someone in a fiduciary position to fulfill the terms of your estate plan. Depending on the document, this could be a personal representative, executor, trustee, etc. The people chosen to fill these roles are often a spouse, adult child, close friend, relative, or professional group. Consider appointing successors for the various functions in your estate plan if one or more of your fiduciaries is unable to serve when the time comes.

Sign Documents and Retitle Assets

The help of your estate planning team will be critical when it comes to completing and signing the necessary documents that finalize your plan. Your documents must be fully executed (i.e., signed and compliant with other legal requirements such as having proper witnesses). You might also need to retitle certain assets into your trust if you created one.

Finally, some of your assets may have payable on death (POD) or transfer on death (TOD) forms that you will need to review and possibly change to ensure they fit with your newly created plan. This could be a life insurance policy, bank account, or investment/retirement fund. Many are surprised to learn that assets with these forms will operate outside of their estate planning documents.

Common reasons for reviewing your estate plan include the passage of time or significant changes in your family and assets
Common reasons for reviewing your estate plan include the passage of time or significant changes in your family and assets

Revisit Your Estate Plan from Time to Time

Another common misconception about estate planning is that it is a process you do once and then never think about again. Unfortunately, estate plans do not operate in a vacuum. Changes in your assets, life circumstances, or the law can significantly impact how your estate plan operates and the effect it has. Revisit your estate plan occasionally and see if any life events would necessitate an update. For example, buying or selling a significant asset, marriage, divorce, death, etc.

Meet with an Advisor Today

The team at Yellow Cardinal Advisory Group is eager to help clients navigate the estate planning process together. Fiduciary officers are trained to understand and interpret estate planning guidelines to find the approach that best suits each client.

Contact Yellow Cardinal Advisory Group to explore how our estate settlement and trust administration services can support your estate planning goals.

Estate Planning Image: Adapted from “When to Update Your Estate Planning Documents,” by Financial Residency; https://financialresidency.com/when-and-why-you-update-estate-documents/

The information on this page is accurate as of March 2022 and is subject to change. First Financial Bank is not affiliated with any third-parties or third-party websites mentioned above. Any reference to any person, organization, activity, product, and/or service does not constitute or imply an endorsement. By clicking on a third-party link, you acknowledge you are leaving bankatfirst.com. First Financial Bank is not responsible for the content or security of any linked web page.

leaving bankatfirst.com

You are about to go to a different website or app. The privacy and security policies of this site may be different than ours. We do not control and are not responsible for the content, products or services.

Just launched: the new online banking experience

Sign in now to access your account, or download the new app by searching "Your First Financial."