Estate planning: 6 steps to ensure your family is financially ready for when you die

When Vivian Young and her then-husband took their first vacation without the kids, the need for estate planning struck them like a jolt. “I started thinking about worst-case scenarios,” says Young, now 64, of Los Angeles.

Worried about who would take care of the children if something were to happen to them, they found an attorney who quickly drew up a will. Over the years, Young’s estate plan evolved when her life changed, such as when she divorced and when her children turned 18. Putting off planning can be tempting, she admits, “but there are consequences.”

More than half of Americans will learn those consequences first hand, as only 42 percent have a will or other estate planning documents, according to a 2017 study. Among parents of children under 18, only 36 percent have created a will.

But if you die without a will, your state’s laws will determine what happens to your property or who should be legally responsible for minor children. That might be OK in some situations, but in others, a grandchild with special needs might not get the resources you want him to have, or an estranged family member might get possession of your house.

“What people get wrong is thinking that if they don't do anything, things will work out,” says John Terrill II, incoming president of the American College of Trust and Estate Counsel, an organization of estate planning attorneys.

Since we don’t know when we will die, it’s never too early to start coming up with a plan.

Here is what you should consider:

Start with a will

A will is a document that designates who should get your money and possessions, as well as who would become a guardian to your minor children if both parents die.

“Each state has its own unique estate planning laws, and those laws can change each year,” says Dave Hanley, CEO of Tomorrow, a Seattle-based company that developed the Tomorrow app, which lets consumers create wills for free. Websites such as LegalZoom and Rocket Lawyer also walk you through the process if you want to do it yourself. But make sure any will you create meets your state’s legal requirements.

Joy Loverde and David Schultz in Sedona, Arizona.


Think beyond death

When Joy Loverde, 67, and David Schultz, 74, of Chicago married in 1999, they realized that they had like-minded philosophies about money. However, Loverde, who writes about elder issues in her book, "Who Will Take Care of Me When I’m Old," found that people often overlooked planning for hardships that can occur while they were still alive.

“One of the things that I brought to the table early on is this idea about protecting each other in the event of incapacity more so than in the event of death,” she says.

A living will is a legal document that states what medical procedures you want or don’t want if you are incapacitated and can’t speak for yourself. This would be the go-to document if the question ever arises about whether to continue life-sustaining treatment. Durable powers of attorney are legal documents that let someone you appoint make legal, financial and health care decisions for you if you can’t do it.

Consider establishing a trust

Some may benefit from establishing a trust, a legal entity that holds any property that you want to leave to your beneficiaries. With a trust, your family won’t have to go through the legal process of probate, where the court ensures that your assets are distributed and your debts are paid. Trusts also allow you to set up rules for how and when property is distributed. If you do this, you’ll need to identify a trustee who will manage the trust.

Communicate your wishes

It’s important to let people know when you’ve designated them a trustee or a guardian, says S. Mark Alton, president of the National Association of Estate Planners & Councils. “We don't often communicate with the trustees and/or the trust protectors, and say, ‘This is going to be your role. You're going to be a surrogate for me.’”

Review your beneficiary choices

If you have investment accounts and retirement plans such as a 401(k), make sure the person you have listed as the beneficiary is the person you want to receive those funds. Even if your will says otherwise, the beneficiaries listed on the account will inherit the money. Your plan will likely change as your life evolves.

“You have marriages and divorces. You have births and deaths," says Alton. "You have to change beneficiary designations at those times.”

Seek professional help

Estate planning can cost hundreds or even thousands of dollars depending upon how complex your affairs are, says Terrill. However, if your affairs are complicated, seek help.

When Shultz and Loverde married, he had two grown children and she had one. Like many blended families, their needs were complex.

“I was an attorney myself but didn't handle that kind of legal situation, so knowing what you know and knowing what you don't know is pretty important,” Schultz says.

Not only do estate planners help you ensure that your wishes are met, they can also help you figure out how to allocate your assets in a way that is most tax-advantageous, adds Terrill.

End-of-life planning isn’t something that we typically look forward to, but it’s a necessary action if you want to have full control over your life and your assets.

“We have to move toward more intentional and more purposeful planning,” Alton says.