10 Steps to Creating Your 1st Estate Plans

8 Feb

 Forbes writer/blogger, Hani Sarji, wrote the following as a follow-up to “How to write your first estate plan” article on Forbes.Com.

Hani Sarji
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Beyond Just Taxes: Ten Estate Planning Steps

Jan. 29 2011 – 2:10 pm | 514 views | 0 recommendations | 3 comments

On January 26, 2011, Forbes.com published How To Write Your First Estate Plan, by Ashlea Ebeling. Ebeling encourages readers to create an estate plan. Ebeling’s article is useful in at least two respects: (1) it dispels a number of myths about estate planning, and (2) it is accompanied by ten pictures that explain the basics of an estate plan.

Here are some myths that I highlighted.

Myth: I only need an estate plan if I am exposed to an estate tax.

Fact: Estate taxes are not, and have never been, the sole consideration in estate planning.

Ebeling dispels this myth: “What about saving estate tax? That used to be the big sell for estate planning, but no more. . . . Whatever motivates you, fine. The point is–whether you’re in estate tax territory or not, if you don’t have an estate plan, you need one.”

As Deborah L. Jacobs recently said in her very informative webinar, the mantra is that “it’s not just about taxes.”

Myth: I have a will, so I have an estate plan.

Fact: An up-to-date will is only one part of an effective estate plan.

Ebeling informs that estate planning entails more than just creating a will. It could mean ensuring that beneficiary forms–for life insurance and retirement accounts—are up-to-date. It could also mean creating a trust, e.g., a trust for minors or a trust for asset protection purposes. Estate planning also entails choosing the right executor and the right guardian, when the circumstances call for a guardian.

Myth: Although we are wealthy, “portability” will protect us.

Fact: Wealthy people should always consult an estate planning adviser. They have estate planning opportunities that less wealthy people simply don’t have the money for.

Ebeling explains, “As you get wealthier, the list of tax savings strategies worth considering grows: family limited partnerships, irrevocable life insurance trusts, lifetime gifting, qualified personal residence trusts, grantor-retained annuity trusts, private foundations and charitable trusts.”

In addition, people should speak to their estate planning adviser about what portability means in their circumstances. Reading Deborah L. Jacobs’ articles will help make the conversation with the estate planning adviser easier: Planning For A Disappearing Estate Tax Break, Married Couple’s Guide To The New Estate Tax Law.

Ten steps to creating your first estate plan

Ebeling’s article is accompanied by ten interactive pictures that give the steps for creating a first estate plan:

  1. Make an inventory
  2. Get a will
  3. Pick an executor
  4. Update beneficiary forms
  5. Sign an financial power of attorney
  6. Sign an health care power of attorney (and a HIPAA authorization)
  7. Sign a living will
  8. Review your insurance
  9. Make funeral arrangements
  10. Execute all forms

Click to take you to In Pictures: 10 Steps To Create Your First Estate Plan


3 Responses to “10 Steps to Creating Your 1st Estate Plans”

  1. EstateLogic February 9, 2011 at 12:21 PM #

    Great recap, Hani. As a practitioner, how often do you suggest that people update their estate plans once created? We tend to see another myth — that once an estate plan is created, you don’t ever need to look at it again.

    • craigslistdad February 9, 2011 at 12:33 PM #

      CraigslistDad here – author of this blog, certified financial planner and certified private wealth advisor with 20 years experience in the wealth management industry. I say before & after a life event (ie. considering retirement, sale or start of business, death or birth or family member) is time to review estate plans, drastic change in net worth (+ or -), when there are changes in estate tax laws. Otherwise every 3-5 years is good time frame – things change with family dynamics, assets, charitable intentions, specials needs, etc. That is a BIG myth – once you have an estate plan in place it’s NOT golden!

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