Estate Planning Checklist for 2024

Estate planning is more than writing a will; it’s a plan to manage the legacy you want to pass to your loved ones.  It documents your healthcare preferences, prepares for aging and incapacity and conveys your assets to those you choose.   The National Council on Aging (NCOA) Adviser’s article, “Estate Planning Guide and Checklist for 2024,” offers an overview of what to consider when planning your estate.  There is no perfect checklist as all estate plans should be tailored to the individuals using them, and so what you may want or need could vary, but it’s certainly a good idea of what to consider.

So, this blog will cover an estate planning checklist for 2024.

Understanding Estate Planning

Estate planning organizes your affairs to fulfill your wishes after you pass away. It encompasses decisions about money, property, medical care and care for your beneficiaries. The process includes creating essential documents like wills, trusts, powers of attorney, medical documents and more.  Estate planning provides peace of mind that your wishes are known and respected, benefiting your loved ones, so it is important to consider all of the key documents in the estate planning checklist.

Key Documents in Estate Planning

  • Wills: A legal document that outlines how to distribute assets after your death.
  • Trusts: Contracts that allow a third party, or trustee, to hold property and other assets on behalf of a beneficiary.  These are used for many purposes depending on what kind of trust, such as tax planning or probate avoidance.
  • Powers of Attorney: Legal documents that grant someone else the authority to make decisions on your behalf, such as if you want to delegate to someone or because of your own incapacity.
  • Medical Documents: Documents that state your wishes regarding medical treatment when you cannot communicate your choices.  These, depending on your state, including documents like medical powers of attorney, directive to physicians (living will), HIPAA authorization or similar documents.
  • Disposition of Remains. Some states, such as Texas, have a standalone estate planning document that indicates what your final disposition wishes are, such as cremation or burial, and who is in charge of seeing that through. Other states work these concerns into existing documents.
  • Guardianship for Children.  This isn’t applicable to everyone, but if you have minor children you can name a guardian to care for them should you pass away.  This is often one of the main reasons why young couples even consider estate planning.

Key Takeaways

  • Common Estate Planning Documents: Wills, trusts, financial power of attorney and medical documents are fundamental to estate plans.
  • Everyone Needs a Will, but Consider a Trust: Regardless of the size of your estate, a will is crucial to fulfill your wishes.  What you do beyond that is dependent on your goals and situation, but always consider a trust.  People tend to assume a trust is only for the rich, but trusts are very versatile and help with many client concerns in a way that wills cannot.
  • Review Your Estate Plan Regularly: The original article says update your estate plan regularly, I say review it.  If you don’t review it regularly, it is easy to  forget the details, which makes the estate plan difficult to properly implement and even harder to update.  2024 is an excellent year to review because the estate tax thresholds are changing in 2026, exposing more clients to estate taxes than in the past.

Conclusion

Consider estate planning to be a critical process to protect your assets, provide for beneficiaries and have peace of mind for the future. Follow the estate planning checklist to create your personalized estate plan.

Reference: NCOA Adviser (Aug 21, 2023): Estate Planning Guide and Checklist for 2024.

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3 Key Reasons to Use a Trust

Estate planning is plumbing: sophisticated, legal plumbing to move your assets from you to whomever you wish.  An estate planning attorney designs the plumbing based upon your concerns, whether they be incapacity planning, taxes, creditors or other issues.

The two main tools estate planning attorneys use to build these pipes are wills and trusts.  Planners often use trusts as part of the estate plan design because they are versatile.  They solve more problems than a will.  There are many reasons to consider using a trust as opposed to only a will, and here are three key reasons to use a trust:

Understanding Wills vs. Trusts

A will is simple in purpose.  It outlines who gets what and who speaks for you after you are gone.  It requires the probate process to approve it and appoint the person you named to act for you, but otherwise is a straightforward document.

The trust, however, does more.  The trust provides who gets what and who speaks for your stuff after you are gone, without court involvement.  But, it does this through holding your assets or receiving them at death, managing and distributing them according to your instructions, both during your lifetime and after. Unlike a will, a trust offers a private, probate-free path tailored to personal circumstances.

See this article for more:  https://galligan-law.com/will-vs-living-trust-a-quick-and-simple-reference-guide/

You Have a Blended Family

Blended families are like tapestries – intricate, colorful and diverse. However, this beauty can result in complexity when it comes to estate planning. With children, stepchildren and multiple parents involved, a will’s one-size-fits-all approach may unravel the fabric you’ve so carefully woven.

A trust, however, can be the tailor to your tapestry. It allows you to:

  1. Specify exact allocations: Deciding who gets what, when and how.
  2. Protect your children’s inheritance: Ensuring that your children, not just your spouse’s, benefit from your estate.
  3. Avoid unintended consequences: Preventing your assets from unintentionally passing to a new spouse’s children in the event of remarriage.

You Own Property in Multiple States

The second of reason to use a trust is owning property in multiple states.  This is one of the hallmark reasons to use a trust and virtually always leads to using a trust.  Probate in Texas isn’t that bad.  But, if you own property in multiple states, you won’t just probate in Texas, you may have to probate in every state where you own land.  That is far more work for your loved ones, and you will have to anticipate the law of several states, not just Texas.

The trust can own the property in all of those states and by virtue of its ownership, the land can avoid probate.  It allows for:

  1. Centralized management: One entity handling all properties, irrespective of location.
  2. Smoother transition: Bypassing multiple state probate processes.
  3. Cost and time efficiency: Reducing legal fees and administrative delays.

You Value Privacy and Want to Avoid Probate

The last of the 3 key reasons to use a trust is privacy.  Probate, by its nature, is public.  Probate is Latin for “prove it,” so the process involves publicly displaying the will for the world to see.  Parts of it can be private in certain circumstances, but is designed to be public.

A trust, conversely, is the private screening of your final act. It shields your estate from the public eye and sidesteps the time-consuming, often costly, probate process. With a trust you’re not just planning; you’re protecting.  Trusts, short of a dispute, aren’t even filed so the process can remain very private.

Additional Considerations

When it comes to estate planning, one size does not fit all. The decision between a will and a trust should be weighed with:

  • Incapacity planning:  This is reason 3.5.  Trusts allow a trustee to manage property which gives greater control over assets while a loved one is incapacitated.
  • Tax implications: Understanding how each option affects your estate tax-wise.
  • Personalized solutions: Every estate is unique, as is every state, and so should be its plan.
  • Long-Term care planning:  Probate avoidance is a key factor for Medicaid planning

In the tapestry of estate planning, trusts emerge as a nuanced, flexible thread, weaving through the complexities of blended families, multi-state properties and privacy concerns. If these signs resonate with your situation, it might be time to consider a trust.

Remember, the best estate plan is one tailored to your unique story. We encourage you to seek professional estate guidance to navigate these waters.

 

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Estate Tasks to Complete After a Loved One Passes

Estate planning clients occasionally ask for a list of steps or estate tasks to take after their passing to give to their loved ones.  I’ve always resisted making such a list because the exact steps change over time and don’t always apply depending on the circumstances at that time.  That said, there are some general steps that your loved ones or your fiduciaries may need to take which I’ll address here.

This is somewhat based upon the recent article, “11 Financial Steps to Follow After the Loss of a Loved One,” from U.S. News & World Report, although I added some of my own estate tasks.

Grieve. I heard a very venerable estate attorney say to a client that this is always the first step.  Many of the tasks on this list are important, but rarely so urgent that you can’t take a week to attend to the funeral or final services, contact family and friends, arrange an obituary and grieve.  So, start there.

Obtain a death certificate. This usually comes from the funeral home. You’ll want to get five to ten original certificates, which will be used for various legal and financial matters.  You rarely need that many, but it is very easy to get them once a loved one dies, very difficult to get more later if you run out, so a few extra is a great idea.  If the decedent was a veteran you can get them for free.

Gather financial documents. This includes estate planning documents, a will, a trust, bank and investment account information, utilities and bills, insurance policies and tax returns.  This is very time intensive so hopefully the decedent had a complete estate plan, let the fiduciaries know how to access the documents, assets and liabilities in advance of their passing.

Reach out to advisors. This includes the estate planning attorney, financial advisor, CPA and other professionals working with the deceased. They will be able to offer guidance as you go through the process of managing the estate.  Do this on the early end and with as much of the financial info on hand as you can so they can provide you with more specific steps to take.

Contact any government agencies. If your loved one was receiving benefits from Social Security, the Veterans Administration, Medicare, Medicaid, or any other government agency, you must notify them of the death. The funeral home may have already sent the SSA a notification, which is most common.  You may still want to confirm if it has been sent, as the ultimate responsibility for notification is the surviving spouse or adult child.  You’ll know it happened when Social Security pulls the last retirement payment out of the account after death.

Contact financial institutions. The financial institutions, including commercial banks, brokerage accounts and insurance companies, will all need to receive an original death certificate. If there is a POD (Payment on Death) order, the balance on accounts will be transferred to the designated beneficiary. If there are life insurance policies, you’ll need to find the policy and identify the designated beneficiary.

This process can occur here, later in an estate administration or both, and can go in many different directions depending upon the assets. Generally, the goal is to remove the decedent’s name from all accounts of every kind and then distribute the remaining assets to the beneficiaries in accordance with the estate plan.

Avoid identity theft. Contact credit agencies, including Experian, Equifax and TransUnion, to notify them of the death. You may need to contact one for the others to become aware. You should also close the social media accounts of the deceased. Depending on the platform, you may only be able to memorialize the account instead of deleting it.

Other important institutions to contact. The post office will need to be notified, although you may first want to have the person’s mail sent to your home directly. The motor vehicle department needs a notification of death to stop renewing licenses. Unions and professional, service, or fraternal organizations should be notified. There may be survivor’s benefits.

Prepare the final tax return. There are two tax returns to be aware of—the final income tax returns and the estate tax returns. Your estate planning attorney will know the deadlines for both if they apply.  There is actually a third, which is the estate’s income tax return, although that doesn’t always apply.

Filing the will with the probate court/estate administration Once the will goes through probate and is approved by the court, the executor will be able to distribute the deceased’s assets in accordance with the will. If there is no will, the distribution will be overseen by the court and follow the state’s intestacy laws.  You may also utilize a trust to avoid most of this work.  This is the main estate task people anticipate.

Settle any remaining debts. In most cases, the remaining liability on a mortgage or car loan will be payable by the person inheriting them. All other forms of debt, like student loans, credit cards and medical loans, will be charged against the decedent’s estate.  However, and I stress this, discuss debts with the estate administration attorney.  Many estate administration clients try to move fast and pay debts without requiring validation or considering whether they should pay it.  Many states, Texas being an excellent example, have laws limiting estate liability for debts, so they may not have to be paid in the first place.  Creditors also (in most cases) can’t collect the decedent’s debts from beneficiaries, so family should avoid paying debts from their own assets.

This is a complex issue, so see this article for more detail:  https://galligan-law.com/do-i-have-to-pay-the-estates-debt/

There are of course more detailed estate tasks to complete, so speak to your professional advisors when the time comes to determine what steps to take.

Reference: U.S. News & World Report (Sep. 1, 2023) “11 Financial Steps to Follow After the Loss of a Loved One”

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