Estate Planning Strategies

Your estate planning strategies should start with protecting what matters most. That’s your spouse, kids, and most valuable assets. Accomplishing that can be a bit confusing, however, given the myriad options available.

Do you need a will, a trust, or both? What about arrangements, guardian designations, and durable powers of attorney? To complicate matters even more, every state has its own set of rules.

There often are multiple solutions available for accomplishing the same thing. If you want your daughter to inherit your house, for example, you can do that through a will, trust, vesting with survivorship rights, even a beneficiary deed in some states.

What method is best depends on your age, health, level of wealth and other factors. Educate yourself on your options, whether you're seeking an estate planning attorney’s help or doing it yourself.

The 3 Bs

I’ve split my estate planning strategies into three distinct sections. When you’ve completed all three, you can be assured that you’ve got the “big stuff” covered, and you’ll sleep a bit easier at night.

Body - Detail any last requests, including arrangements.

Brains - Appoint individuals to represent you.

Bling - Assure your most valued assets pass seamlessly and inexpensively to your beneficiaries.

Body

Do you want to be buried, cremated, dissected, or disassembled? Shall there be a formal funeral and viewing or a more muted affair? What about religious considerations? Putting instructions in a will or trust stand the chance of going unread until after it's too late.

This is especially true if you’re interested in becoming an organ/tissue donor, or you’re already signed up. Time is of the essence.

That’s why your last arrangements are going to be the very first item on what I call your Bus List. (As in what would happen if I get hit by a bus?) Start your Bus List right now with this first entry. Get the ball rolling. Other notations will follow as you complete the Brains and Bling sections.

Don’t leave these details to others. Take care of things right now. Your loved ones will be grateful that you did in their time of grieving and sorrow.

Brains

Next, it’s time to decide who will carry out some very important duties on your behalf. No matter what your situation, age, or level of wealth, you’ve got to appoint folks to fulfill the following duties:

  • Person who retrieves your list
  • Guardians for minor children (if applicable)
  • Executor / Executrix
  • Durable powers of attorney

Person Who Retrieves Your List

If you are ever declared mentally incompetent, this appointee needs to find and read your list. They'll be in charge of retrieving documents and delivering them to the appointments you'll make later in this section.

Hopefully you won’t be declared mentally incompetent during your lifetime (knock on wood). If not, this appointed brain will first read your list upon your passing, and fulfilling your wishes outlined in the Body section would be their first task.

Have a chat with your appointee. Share with them the location of your list. Reiterate how important it is that they retrieve your list immediately upon your passing (or declared mental incapacitation).

Guardians for Minor Children

Skip this section if you don’t have kids under the age of 18. If you do, you need a will to name the guardian or guardians for your kids if disaster strikes. This is really important. Otherwise, some judge makes the call, and they could choose the last person you’d want for the job.

Formalize your decision by drawing a legal will and naming that guardian(s). If for whatever reason your first choice falls out of favor, update your will with an amendment indicating the change. Until your youngest reaches the age of 18, be diligent about monitoring this most important of designations.

Both parents should have the exact same guardian designations in their individual wills to avoid confusion. You might consider naming a successor guardian in case for whatever reason your first choice is incapable of accepting guardianship.

Executor / Executrix

Your choice of executor (or executrix if appointee is female) is also named through a will. Although a will can do other things, like bequeathing assets, you need a will if for no other reason than to name your executor (and your guardians for minor kids, if applicable).

Your executor is going to be in charge of things in the months after you die. Duties include inventorying and appraising assets, filing last tax and estate tax returns, and interacting with judges and hiring professionals.

Durable Powers of Attorney

This section doesn’t have to do with your untimely death. It has to do with losing your mental capacities while you’re still alive.

Like most of the subjects we’re broaching here, we’re talking worst case scenario: You go in for a routine operation and something goes wrong; You’re involved in a serious car accident; A form of dementia, like Alzheimer’s, Parkinson’s or chronic traumatic encephalopathy develops.

If this happens, you won't be able to make your own healthcare decisions or manage your finances. That's why it's a good idea to appoint both a healthcare brain and a financial brain. You may or may not appoint the same person for both jobs: It’s up to you to decide.

Healthcare Brain - Given the power to make health care decisions on your behalf.

Financial Brain - Given the power to perform financially related duties like paying bills, depositing checks, filing tax returns, and managing assets.

Grant these powers to your brains via a durable power of attorney, or consider a springing durable power of attorney.

Like your will, these original documents should be safeguarded. Note the location of the documents in your Bus List if you're storing them elsewhere.

Bling

What are your most valuable assets? Those are the ones we need to protect. For most folks, that means retirement accounts, real estate, life insurance, and securities.

Protect from what? We want to protect those high value assets from probate. It’s not that your state’s probate process is evil; it serves its purpose for those who haven’t done their estate planning. But that’s not you, is it?

That’s where will substitutes come in. Assets passed through will substitutes avoid probate. Those assets are available to your beneficiaries shortly after your passing, not years after like probated assets.

Many of these will substitutes are free. Depending on your state of residence, even the pricier will substitutes like trusts save your beneficiaries money given the high costs associated with probate.

Whichever options you choose, make sure to add the location of any legal documents executed in the Bling section of your Bus List.

Will Substitutes

  • Beneficiary Designations
  • Beneficiary Deeds, TODs, and PODs
  • Rights of Survivorship
  • Living Trusts

Estate Planning Strategies

Once you finish all three sections of your Bus List and execute the appropriate legal documents per your choices, you can rest assured you’ve got the big stuff covered.

Don’t forget to keep your Bus List updated. Whenever a big change in your life occurs, make sure you not only update your Bus List but all of your estate planning documents. Otherwise, look them over every few years or so, and do your best to keep your list as up-to-date as possible.

The Bus List



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Your loved ones will be grateful you took time to write your own Bus List.