Estate Planning Checklist

Kelley S. Daugherty is an attorney in Sophisticated Planning Strategies at Northwestern Mutual. 

When you hear the words “estate planning,” you may think it’s something that only people with a lot of money need to think about. But the reality is: anyone over 18 could benefit from a little estate planning 101. That’s because estate plans are about more than how much money you have. They help ensure that your wishes for yourself, your family and your assets are carried out in the event of your illness or death. 

What are the key estate planning documents I should have? 

What exactly is in an estate plan, anyway? An estate plan is built by creating several legal documents. Here's an estate planning checklist with five key things to include and some additional topics to keep in mind. 

1. A will or trust 

A will or trust is an essential part of an estate plan. A last will and testament is a document that spells out how you want to divvy up your property and assets when you die. It should also include details about who you appoint as guardian for your minor children and other dependents or pets, as well as any specific instructions for their care.  

A trust accomplishes the same thing and appoints a trustee to carry out your wishes. There are different types of trusts you can set up, depending on what you’re trying to accomplish. Without a will or a trust, a judge will make many of these decisions.. 

When deciding whether to use a will or a trust, it’s important to know the differences between the two. A will goes through probate, which means it must go through court proceedings to be executed and becomes a public record. A trust, meanwhile, can avoid probate and is privately handled. A trust can also take effect before you pass away, which means you can serve as your own trustee while you’re alive and then appoint someone else to take over after your death.

2 . Beneficiary forms 

It’s possible to pass along assets outside of a will if you’ve designated beneficiaries to your various financial accounts—including bank, brokerage and retirement accounts, as well as life insurance policies. 

Because beneficiary forms trump what you put in a will, it’s important to keep your designations up to date. If your situation changes (you’ve had a divorce, remarriage or the death of a beneficiary), update your beneficiaries as soon as possible to ensure that your wishes are followed. In many cases, you can split your assets between more than one beneficiary or name a secondary beneficiary in the event the first person you named passes away before you do. 

3. Durable powers of attorney 

A power of attorney allows you to appoint someone to act on your behalf when you’re unable to communicate your wishes due to illness or injury. You can appoint a single person to handle everything, or you can designate different people to handle different situations.  

For example, you might want your spouse to be your agent under a health care power of attorney, while a money-savvy sibling acts as your agent under a financial power of attorney. It’s also a good idea to have backup agents named in your powers of attorney in case your first choice is unable or unwilling to act. 

4. A living will 

A living will is a set of instructions that outlines what kinds of medical treatment you would want—or do not want—if you become incapacitated. For example, if you were to fall into a coma, a living will would detail whether you wish to be kept on life support. 

A living will is usually paired with a health care power of attorney (sometimes called a health care proxy). These documents together are called your advance health care directive. Having instructions in place can reduce stress for your family during what can be a stressful situation. 

5. Letter of intent 

A letter of intent is exactly what it sounds like: a letter left to the executor of your will that provides an overview of your wishes for your assets and your family after your death, as well as any preferences for your funeral or burial. 

It doesn’t replace a will or trust because it’s not a legally binding document. Rather, it’s a supplement that adds a personal touch because it was written by you. You can use your letter of intent to relay your logistical wishes and more emotional ones, like the types of values you hope to see your family carry on after your death. 

Important things to know about your estate plan 

Here are some tips that can help you create a solid estate plan:  

Choose the right executor or trustee 

Your trust might be around for a long time (even multiple generations) so choose someone as your executor or trustee who is ready for a long-term commitment. Of course, the executor needs to meet the legal requirements set by the state. Some states have their own requirements, but generally, an executor must be of legal age (usually 18 or 21 years old) and mentally competent. Make sure you also choose someone who is trustworthy, reliable and capable of handling financial matters responsibly and keeping everything organized.  

Once you decide on one, speak to your candidate and make sure they are willing to take on the role. The executor or trustee might need to deal with conflicts among beneficiaries or family members, so it can be a big responsibility. 

Have the right supports in place 

When your executor or trustee handles your estate, you want to make sure they have the professional support they need to carry out your wishes. For example, many states have adopted a law called the Uniform Trust Code (UTC), which is intended to create a system for common trust law. If your executor is not already familiar with your state’s inheritance and estate tax laws, make sure to connect them with an expert such as a lawyer who knows these rules.  

Make information easy to access 

To help your executor or trustee find the information they need, make a list of what accounts you have, where they are and how the executor or trustee can access them. Though they may be able to get access without your logins and passwords, providing them with this information in advance can allow them to access information much more quickly. Make sure to keep this information separate from your will, which can become public after you pass away. You might also include contact information for friends and loved ones who should be notified of your death. 

Maintaining your estate plan 

Once you’ve got all your estate planning documents in order, don’t assume that you can “set it and forget it.” Your decisions for your assets and your health might change over time, or as you go through major life events. So check in on your estate plan periodically to make sure it still reflects your wishes and values. 

Your estate plan is also something you’ll want your Northwestern Mutual financial advisor to be familiar with.  While you’re alive, your advisor may be able to make recommendations about how to make the most of your legacy, and when you’re gone, your advisor can work with your executor and trustee to help fulfill your wishes. 

This article is not intended as legal or tax advice. Taxpayers should seek advice based on their particular circumstances from an independent tax advisor.