Estate Planning Checklist

One of the common misconceptions the estate planning team at RJS LAW hears is that estate planning only applies to wealthy people with lots of assets. This could not be further from the truth. A proper estate planning checklist should encompass everything you own and include instructions as to how you want those assets, regardless of value, to be distributed. A proper estate plan will create instructions as to how you want your wishes to be implemented should you unable to express them.

To help prepare a proper estate plan, RJS LAW has created a short checklist to help guide the process and our estate planning team. With locations in San Diego and throughout Southern California, we are ready to assist and answer any questions as you prepare for the future.

What is estate planning?

Broadly speaking, estate planning is the process of identifying and determining who will make health care decisions and manage your assets should you become incapacitated and who will receive your assets upon your death. While it may seem straightforward to ensure your beneficiaries receive your assets, careful planning will help reduce and/or minimize family stress as well as applicable estate, gift, income, other related potential taxes.

Establishing a proper estate planning checklist starts with recognizing your financial positions and how and to whom you want your assets distributed. As your financial and personal situations change with time, it is recommended to review and update your estate plan on a regular basis to ensure your documents accurately reflect your wishes and that all assets are properly included.

Getting started is sometimes the hardest part. The below is provided as that proverbial first step of the journey in creating a proper estate plan:

Inventory Assets

As stated above, many do not believe they have enough assets to justify an estate plan. However, as set forth below, it may be surprising to realize what you own.

To that end, assets for the estate plan may include:

• Homes, land, or other real estate
• Vehicles including cars, motorcycles, or boats
• Collectibles such as coins, art, antiques, or trading cards
• Jewelry and heirlooms
• Checking and savings accounts
• Stocks and bonds and life insurance
• Retirement plans and IRA accounts[1]
• Health savings accounts
• Business interests
• Other personal possessions – even frequent flyer mileage

Once the list of assets is determined and written down, the next step is to estimate the value of each item listed. In some cases, an outside valuation, like a recent home appraisal or financial account statements may be used. For personal items and family keepsakes, it may help to estimate the value on how we believe our heirs would value those items. This will help create a plan that is equitable to loved ones.

Account for family needs

Once we have a comprehensive list of assets, the next step involves and understanding of how best to protect those assets and the family’s needs once you are gone.

Key questions include:

• Do you have life insurance? Should you? Do you have enough life insurance?
• Who will be the guardian and the backup guardian for your minor children? Planning ahead will allow for those chosen to understand and accept their responsibilities and will help avoid potential domestic issues when placing children under another’s care.
• What are your wishes for your children’s care? You cannot assume that family members will just “be there” or that they share your ideas about raising children. Documenting your wishes for the care and education of your children will provide guidance and help your wishes be fulfilled. This includes making specific funding available to finance those wishes.

Establish legal, financial, and health directives

A complete estate plan includes the creation of legal and financial directives. If applicable, the creation of a trust may be appropriate. A Revocable Living Trust permits the owner to continue using their assets as they see fit.  However, in the event of illness, incapacitation, or death, a Revocable Living Trust allows pre-selected and designated trustee(s) to manage and implement the details contained in the trust, including but not limited to the care of children, settlement of outstanding liabilities, the distribution of assets to beneficiaries, and closure of the estate.  

Creation of a Power of Attorney for asset management is also an important part of an estate plan as it works hand in glove with the revocable living trust. While both documents pertain to financial matters, the power of attorney also deals with everyday things such as addressing spiritual and religious needs, caring for pets, pursuing, or defending lawsuits, and dealing with government agencies, e.g., various taxing authorities, Medicare, Medicaid, Social Security, and the U.S. Post-Office. The power of attorney is also one of the documents in which you designate guardians for your minor children in the event of your incapacity. Another important aspect of the power of attorney is that it allows your agent (attorney-in-fact) to manage your retirement accounts as those cannot be owned by a revocable living trust during the owner’s life.

An Advance Health Care Directive, also known as a living will or power of attorney for health care, allows you to name individuals who you would like to make your health care decisions for you in the event you are unable to do so. Since this is a tremendous responsibility, it is especially important to plan ahead and make sure that the people you designate are willing and able to act if called upon. An advance health care directive also addresses issues of pain management, end-of-life, cremation/burial, and organ donation.

Review and update your beneficiary designations

Creating a revocable living trust is only the first part. The next part is funding the trust. This includes transferring title to real property to the trust, bank accounts, and other assets. For your retirement accounts, make sure that your beneficiary designations are accurate and in accordance with your wishes. At RJS LAW, our estate planning team will guide you through the process of properly funding your trust. It is recommended that you review your beneficiary designations every year or two to ensure that the designations are in line with your estate planning goals.

Understand Federal, State, and Local Laws

Working with an experienced estate planning attorney, like the team at RJS LAW, will ensure compliance with applicable federal, state, and local laws. As tax laws and regulations continue to evolve, the RJS LAW team can provide tax planning advice to limit exposure and maximize value for beneficiaries.

Establish and Reassess

All estate plans require on-going maintenance. Over time there will be changes in your financial situation, your family status, and changes in the law that may significantly affect the effectiveness of your estate plan. Therefore, you should review your estate plan every year, usually the first quarter of each calendar year. There are two reasons for suggesting this time of the year. First, during the first quarter of the year, you normally assemble the information needed to prepare your income tax return. That information can help you identify any substantial changes in your financial situation. Second, many changes in federal and California law become effective at the beginning of the year. A review conducted during the first quarter of the year will be sure to include any recent changes in the law.

Taking these steps can go a long way towards making sure your wishes are carried out when you are unable to do so due to incapacitation or death. The rules can be complicated, and best outcomes are those that are well thought out and documented. Call today at (619)-595-1655 for a free and confidential evaluation of your needs and goals as working with the Estate Planning professionals at RJS LAW will provide the roadmap to ensure that what you worked so hard to build will live on after you are gone.

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[1] Individual retirement accounts such as IRAs and 401(k)s cannot be owned by a revocable living trust while the account holder is alive, however, while a trust may not be the owner, it can be designated as a beneficiary of such account.

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