American Bar Association Estate Planning Checklist
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American Bar Association Estate Planning Checklist
The American Bar Association Estate Planning Checklist guides you through a comprehensive process of establishing an effective and tax-efficient estate plan.
1
Compile a detailed list of assets and liabilities
2
Identify heirs and devise appropriate estate plan
3
Choose an appropriate executor or trustee
4
Appointment with an estate planning lawyer
5
Prepare a last will and testament
6
Create living will or advanced healthcare directive
7
Approval: Family's Understanding of Estate Plan
8
Establish any necessary trusts
9
Calculate the potential estate tax
10
Ensure all assets are properly titled
11
Have a plan for businesses after death, if applicable
12
Update beneficiary designations on insurance policies and retirement plans
13
Approval: Lawyer's Reviewing of Estate Plan
14
Implement gifting strategies, if applicable
15
Make provisions for payment of estate taxes
16
Approval: Final Estate Plan
17
Ensure safe storage of estate planning documents
Compile a detailed list of assets and liabilities
Create a comprehensive list of all assets and liabilities that the individual possesses. This includes real estate, bank accounts, investments, retirement accounts, debts, and any other relevant financial information. Consider using a spreadsheet or financial software to organize and track this information.
Identify heirs and devise appropriate estate plan
Determine who will inherit the estate upon the individual's death. Consider family members, close friends, or charitable organizations. Develop a plan that outlines how the assets will be distributed among the heirs. Are there any specific conditions or restrictions? Consult with the individual to ensure their wishes are reflected in the estate plan.
Choose an appropriate executor or trustee
Select a trustworthy and capable individual to carry out the instructions outlined in the estate plan. The executor will be responsible for managing the estate, distributing assets, paying debts and taxes, and resolving any disputes that may arise. Consider the individual's ability to handle financial matters and their willingness to fulfill the role.
Appointment with an estate planning lawyer
Meeting with an estate planning lawyer is highly recommended to ensure your estate plan is legally sound and aligned with your goals. Schedule an appointment with an experienced attorney specializing in estate planning. During the meeting, discuss your goals, review your assets and liabilities, and seek legal advice on drafting a comprehensive estate plan. Be sure to provide any necessary documents or information requested by the lawyer.
Prepare a last will and testament
A last will and testament is a legal document that specifies how your assets should be distributed upon your death. It is essential to have a valid and up-to-date will to ensure your wishes are carried out. Work with your estate planning lawyer to prepare a last will and testament that clearly outlines the distribution of assets, appointment of guardians for minor children (if applicable), and any other important provisions. Review the document carefully before signing and executing it.
Create living will or advanced healthcare directive
A living will or advanced healthcare directive allows you to specify your medical treatment preferences and end-of-life decisions in case you become unable to communicate them. It ensures that your healthcare wishes are honored and relieves loved ones from the burden of making difficult decisions on your behalf. Consult with your healthcare provider or legal professional to create a living will that reflects your values and personal choices.
Approval: Family's Understanding of Estate Plan
Will be submitted for approval:
Compile a detailed list of assets and liabilities
Will be submitted
Identify heirs and devise appropriate estate plan
Will be submitted
Choose an appropriate executor or trustee
Will be submitted
Appointment with an estate planning lawyer
Will be submitted
Prepare a last will and testament
Will be submitted
Create living will or advanced healthcare directive
Will be submitted
Establish any necessary trusts
Trusts can be an effective tool in estate planning to protect assets, minimize taxes, and control the distribution of wealth. Consider if establishing any trusts, such as revocable trusts, irrevocable trusts, or special needs trusts, would be beneficial for your specific situation. Consult with your estate planning lawyer to determine the type of trust(s) that may be appropriate and the necessary steps to establish and fund them.
1
Revocable Trust
2
Irrevocable Trust
3
Special Needs Trust
4
Charitable Trust
5
Life Insurance Trust
Calculate the potential estate tax
Estate taxes can significantly impact the amount of wealth transferred to your heirs. It is important to estimate the potential estate tax liability to make informed decisions about estate planning strategies. Consult with a tax professional or estate planning attorney to calculate the approximate estate tax and explore various methods to minimize its impact, such as gifting strategies, charitable donations, or utilizing tax exemptions.
Ensure all assets are properly titled
Proper titling of assets is crucial to ensure their smooth transfer to beneficiaries. Review the ownership and titling of all assets and ensure they align with your estate plan. Update or make necessary changes to titles, deeds, account registrations, and beneficiary designations to reflect your desired distribution. Consult with your estate planning lawyer or financial advisor to ensure all assets are properly titled and coordinated with your overall estate plan.
Have a plan for businesses after death, if applicable
If you own a business, it is important to have a plan in place for its continuation or transition after your death. Consider whether you want the business to be sold, passed on to family members, or managed by a successor. Discuss your intentions with family members, key employees, or business partners to ensure a smooth transition. Consult with a business attorney or advisor to determine the best course of action and address any potential challenges.
1
Sell the Business
2
Pass it on to Family Members
3
Appoint a Successor
4
Establish a Trust
Update beneficiary designations on insurance policies and retirement plans
Beneficiary designations on insurance policies, retirement accounts, and other financial instruments should align with your estate plan. Review and update beneficiary designations to ensure they reflect your current wishes. Consider any changes in family circumstances, such as births, deaths, marriages, or divorces. Consult with your insurance provider, retirement plan administrator, or financial advisor to make the necessary updates.
Approval: Lawyer's Reviewing of Estate Plan
Implement gifting strategies, if applicable
Gifting can be an effective strategy to reduce estate taxes, provide financial support to loved ones, or support charitable causes during your lifetime. Determine if gifting is appropriate in your estate plan and explore options such as annual exclusion gifts, lifetime exemption gifts, charitable donations, or funding education or medical expenses. Consult with a tax professional or estate planning advisor to implement gifting strategies that align with your goals and take advantage of available tax benefits.
1
Annual Exclusion Gifts
2
Lifetime Exemption Gifts
3
Charitable Donations
4
Education/Medical Expense Funding
5
Family Loans
Make provisions for payment of estate taxes
Assess the potential estate tax liability and consider how it will be funded. Plan for sufficient liquidity to cover the estate taxes and minimize the burden on your heirs. This may involve setting aside funds, arranging life insurance policies, establishing trusts, or utilizing other financial strategies. Consult with a financial advisor or estate planning professional to determine the most suitable provisions for the payment of estate taxes.
1
Liquid Assets/Funds
2
Life Insurance Policies
3
Trusts
4
Borrowing
5
Other
Approval: Final Estate Plan
Ensure safe storage of estate planning documents
Properly storing estate planning documents is crucial to ensure their accessibility and protection. Identify a secure location for storing important documents, such as wills, trusts, powers of attorney, and healthcare directives. Consider utilizing a safe deposit box, fireproof safe, or digital storage solution. Inform key individuals, such as the executor or trustee, family members, or the attorney, about the location of these documents to facilitate their retrieval when needed.
