The estate planning process allows you to decide what will happen to your assets once you are gone. You may also plan for how to manage your debts and other obligations. If you have children, you can designate someone to serve as their guardian and manage their assets. These may seem like daunting tasks. It can be easy to feel overwhelmed by all of the details, but with a bit of help, it does not have to be an impossible task.
The following list provides eight things that you can do before you sit down to write your will. If you can complete each of these items, you might find that the process is not so daunting after all. You may also seek the assistance of an experienced estate planning attorney to guide you through the process.
1. Make an inventory of assets
Your will gives instructions on how to distribute or dispose of your property, known as your estate, after your death. You want it to provide as clear a guide as possible so that the distribution of your estate can go smoothly. You may begin by making as complete a list of your assets as you can.
Assets that should go in your inventory may include:
- Real estate, including property that you own by yourself and that you own jointly with others;
- Financial assets, including bank accounts, brokerage accounts, investment accounts, and cryptocurrency;
- Retirement benefits;
- Ownership equity in corporations, limited liability companies, or partnerships;
- Intellectual property, such as patents or copyrights, along with the right to receive royalties;
- Valuables, including artwork, cars, jewelry, or heirlooms.
Your inventory should describe each asset in some detail. In the case of personal property, it should state where each item is located, such as in a safe deposit box or in a specific location in your home. If an asset requires some sort of authentication in order to gain access to it, such as login information for a financial account, you should include this as well.
Once you have finished the inventory, keep it in a secure location. It might have sensitive information that you want to keep to yourself until your will is ready.
2. Compile a list of debts, taxes, and other liabilities
You should account for all debts and other liabilities when you are preparing to write your will. Someone will be responsible for handling your affairs after you die, and you want them to have as much information as possible. With some types of debt, creditors can try to recover money owed to them from the family of a deceased debtor. You do not want to leave that to your loved ones.
Debts that you should list include:
- Credit cards and other consumer debts;
- Secured loans, such as mortgages and car loans;
- Student loans;
- Leases for real or personal property;
- Outstanding tax bills, including both personal and business taxes; and
- Ongoing expenses tied to particular assets, such as homeowner’s association dues and assessments.
3. Decide who your beneficiaries will be
This might be obvious for some, but everyone should put some thought into who they would like to receive something from their estate. At this stage of the process, you do not need to decide who will receive what, specifically, but you should make a list of everyone you want to include when you write your will.
As with your list of assets, you might want to keep this list close while you are still working on your will. Disputes over inheritance can be messy. There is no need to stir up emotions when you are merely planning for the future.
4. Gather documents that show ownership of assets
You might need identifying documents like your birth certificate when you write your will. You will definitely need documents that establish your ownership, in whole or in part, of the assets that you listed earlier. These might include:
- Deeds for homes or other real property, including mortgage paperwork;
- Titles to vehicles;
- Bank statements and other documents from financial institutions;
- Paperwork showing registration or ownership of intellectual property;
- Stock certificates or other documentation of business equity;
- Documents that show ownership of artwork, jewelry, and other valuables, and
- Divorce paperwork, if applicable, showing the division of property between you and a former spouse.
5. Gather documents that show benefits payable to you or your beneficiaries
If you have a retirement account that will pay benefits to you or your heirs, you should locate documents that explain how those benefits will be paid. The same goes for life insurance policies, bank accounts with a right of survivorship, and any other assets that will provide something to one or more beneficiaries outside of the probate process.
6. Identify someone to serve as your executor
Your executor, also known as an administrator or personal representative in some states, will be responsible for carrying out the instructions contained in your will. This is a tremendous responsibility, so you should think carefully about who you want to take this role.
It should be someone capable of handling an intense fiduciary responsibility. Equally important, if not more so, it should be someone that you trust. You should not ask your best friend to be your executor solely because they are your best friend. You should choose someone who is up to the job, and who is willing to do it. If no one that you know is willing or able to serve as your executor, you can choose a professional, such as an estate planning lawyer, to do the job.
7. Identify someone to nominate as guardian of your children
If you have minor children and the other parent is alive and legally competent, they will be responsible for the children if anything happens to you. If, however, both parents die or become incapacitated, you need a plan for the care of the children. The person or persons you designate will be known as the children’s guardians. This is not something anyone cares to think about, but it is a crucial part of an estate plan.
This role also requires someone who is able to shoulder that kind of responsibility, someone who is willing to take the responsibility on, and someone whom you trust enough to raise your children. This could be a family member or a close friend.
8. Identify someone to manage your children’s property, if applicable
If you have one or minor children and include them as beneficiaries in your will, someone will need to manage those assets for them until they reach adulthood. As with the responsibility of raising them, the children’s other parent might have this duty as long as they are alive and legally competent. Your estate plan should have a backup plan, though.
A law known as the Uniform Transfers to Minors Act (UTMA) allows children to receive gifts, including money, real estate, and other valuable property, without a court-appointed trustee or guardian. Your will can provide for the creation of a UTMA account to manage assets that you leave to your children, and it can name a person to serve as guardian of their property. This could be the same person you name as the guardian responsible for your care, or it could be someone else.
Learn more about what you need before you write your will
Writing a will requires you to gather a substantial amount of information about your assets and debts. You must choose the people who will receive your property after you die, and the person or people who will manage your estate and, if needed, care for your children. This might seem like a formidable job, but if you approach it one step at a time, you might find it to be manageable. Plus, you can always ask an estate planning lawyer for help.