Estate Planning Checklist: What to Consider Before You Start
Dec. 28, 2022
Estate planning is a vital step for anyone who wants to protect their loved ones and ensure that their assets are looked after. Drafting a comprehensive estate plan involves assessing your current financial situation, your future needs, and the needs of your beneficiaries. It’s important to consider all of these factors before you begin drafting an estate plan.
Knowing what steps to take when drafting an estate plan can help ensure that your wishes are followed after you pass away. The estate planning attorney at The Law Offices of Steven H. Peck, Ltd. can explain everything you need to consider before you start your estate plan. With an office in Riverwoods, Steven H. Peck provides legal counsel throughout Cook County and Lake County, Illinois, as well as neighboring areas, including McHenry and DuPage counties.
What Is Estate Planning?
Estate planning is a complex process of arranging for the transfer of assets in the event of death or incapacity. It involves making decisions about asset ownership and protection, as well as planning for potential medical care and funeral arrangements.
Estate planning is beneficial because it provides peace of mind in knowing that your wishes will be executed after you pass away. It also ensures that your financial affairs will be handled according to your desires with minimal disruption to family members who may be left behind. Additionally, an effective estate plan can minimize taxes and legal fees associated with settling the estate, as well as reduce conflict among family members regarding how assets are distributed.
What Should You Consider Before Drafting an Estate Plan?
Creating an effective estate plan requires careful planning and consideration. Before beginning this process, individuals should consider a number of items, including:
Financial status (assets and debts). The first thing you should consider before drafting an estate plan is your current financial status. Do you have any existing debts? Are there any assets that need to be taken into account? Knowing what assets and liabilities you have will impact the decisions you make when distributing your estate. It’s also essential to take into account any potential changes in your financial situation that may occur in the future (e.g., you may anticipate receiving a large inheritance or windfall from a business venture).
Beneficiaries. The next piece you should consider is who will be inheriting your assets and how these assets will be divided up among them. You should also decide which assets will go to each beneficiary, as well as how much each beneficiary will receive. In some cases, it may be preferable for certain beneficiaries to receive more than others due to their particular circumstances or needs (e.g., if one beneficiary has long-term care needs or special educational requirements).
Powers of attorney. When appointing an agent in a power of attorney (POA), there are several things to consider, including trustworthiness, availability, experience, expertise, financial knowledge, and communication skills. The individual appointed should understand the scope of their authority and abide by the terms outlined in the document. It’s important to choose someone you trust who understands your wishes and will act on them in accordance with your instructions, regardless of any personal objections they may have about how you want things done.
Funeral arrangements and final wishes. Making arrangements for funeral services and expressing final wishes should definitely be done before drafting an estate plan. Funeral expenses typically come from liquidated assets such as savings accounts or life insurance policies, so having those details determined ahead of time can help avoid delays during a difficult time for loved ones trying to settle the estate. Expressing final wishes can provide closure for family members who may have conflicting views on how matters should be handled after death. That is why having them all laid out clearly can help prevent disagreements down the line.
Tax implications. Finally, it’s critical to consider the tax implications of creating an estate plan. Different types of assets are subject to different levels of taxation upon death; for example, some investments may be subject to capital gains taxes while others may not. It’s also important to understand the tax rules governing gifts made during a person’s lifetime. This can help inform decisions such as whether or not certain gifts should be made prior to death in order to reduce overall taxation on the estate as a whole. Understanding taxes can help ensure that your estate is properly managed after death and that all taxes are paid in full by the executor of the estate.
Accounting for all of these factors can help ensure that any proposed plans meet both short-term and long-term goals while protecting the interests of all involved parties.
Dependable Guidance When You Need It Most
Creating an effective estate plan is essential if you want to avoid potential complications after passing away. With careful planning, you can create a comprehensive plan tailored specifically to your unique circumstances and needs. The estate planning attorney at The Law Offices of Steven H. Peck, Ltd. can help guide individuals through this process while ensuring all relevant issues are addressed properly. Contact our office to schedule a consultation to get started.