Manage Your Home Like a Business: An Estate Planning Checklist

An estate plan is essential for ensuring your wishes are followed if you become incapacitated or pass away. It directs what happens to your assets and assigns responsibilities to trusted individuals.

1. Establish a Living Trust

A living trust holds your assets for your benefit during your lifetime and transfers them to your designated beneficiaries upon your death. This process is managed by a successor trustee you appoint and avoids probate, facilitating a faster, less expensive, and less stressful distribution of assets.

2. Create a Pour-Over Will

A pour-over will is a type of last will and testament that works together with your living trust and is designed to "catch" and "pour" any assets that you failed to put into the trust into the trust. In your will, name an executor you trust to manage the transfer of your assets that pass under the will into your trust. Also, if you have minor children, appoint a guardian for them in your will.

3. Have a Durable Power of Attorney for Financial Decisions

A power of attorney (POA) allows someone to make financial decisions on your behalf if you are incapacitated. You can assign different individuals for financial and healthcare decisions or choose one person for both roles. A durable power of attorney, which remains effective if you become incapacitated, is recommended for seamless decision-making.

4. Prepare an Advance Healthcare Directive with Living Will

An Advance Healthcare Directive, under California law, allows you to name someone to make health care decisions for you when you're unable to. In California, an advance healthcare directive includes a living will, which outlines your preferences for medical care for end-of-life care. This can include what medical treatments you would or would not want if you are in a terminal condition or persistent vegetative state. This includes decisions about life-sustaining treatments like feeding and breathing tubes. Additionally, consider a Do Not Resuscitate (DNR) order, which must be signed by your physician after a discussion with you or your representative.

5. Secure Life Insurance and Update Accounts

Life insurance provides financial support to your beneficiaries and is especially important if you have dependents, own a home, or have significant debts. Naming beneficiaries appropriately on your life insurance, bank, and retirement accounts ensures these assets are transferred in an optimal manner, bypassing the probate process.

6. Address Estate Taxes

Federal estate taxes apply to estates valued over $13.61 million as of 2024, although this amount is set to drop to about $7 million in 2026. If your estate approaches these values, consult an estate planning attorney to discuss planning strategies to address how to minimize or manage your potential estate tax liability.

7. Organize Digital Assets

Compile a list of your digital assets, including login information for online banking, social media, cryptocurrency, and email accounts. Provide instructions on how these assets should be managed and designate someone you trust to handle them. For example, you can assign a "legacy contact" on Facebook to manage your account after your death.

8. Plan End-of-Life Arrangements

Document your funeral preferences and consider prepaying for funeral expenses or setting up a payable-on-death account to cover these costs. Include your wishes regarding organ donation and body disposition in your end-of-life documents.

9. Safely Store Your Documents

Store all your estate planning documents in a secure location and inform your trustee and the person you designated in your POA where they can be found. This ensures your wishes can be executed without delay. Consider a secure digital vault as an alternative to dusty physical file cabinets that loved ones may never find.

10. Regularly Update Your Plan

Review and update your estate plan annually or after major life events such as births, deaths, marriages, or divorces. Ensure that all information, including beneficiaries and assigned roles, remains accurate and reflects your current wishes.

By following this estate planning checklist, you can ensure your affairs are in order and provide clarity and peace of mind for yourself and your loved ones.

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