6 Questions to Ask Yourself as You Make Your First Estate Plan

estate planning paper

An estate plan ensures your loved ones and assets are taken care of if you become incapacitated or pass away. While it’s not exactly an uplifting task, it’s important to plan ahead so your loved ones aren’t caught off-guard or left to sort through your affairs on their own.

However, thinking about your final wishes, especially at a young age, can be overwhelming. To help make the process of developing your first estate plan easier, here are six essential questions to ask yourself.

1. What assets do I have?

Assets come in two forms: tangible and intangible. Having a list of your assets is an imperative part of the estate plan execution process, and as you create your plan, will help you answer important questions. Your assets may include: checking accounts, savings accounts, a life insurance policy, 401(k) or other retirement accounts, a business you may own, copyright or trademark, real estate, vehicles (including boats, trailers, motorcycles, etc.), valuable heirlooms or antiques, and social media or digital assets.

2. Who do I want as my executor?

Your executor is the person responsible for carrying out your final wishes set forth in your Will after you die. The key consideration in selecting an executor is whether they are trustworthy and well-organized. While some people name a close family member, like a spouse or adult child, you can also choose a trusted friend or a professional (e.g., a lawyer, CPA, financial planner or even a bank) to serve as your executor. A person who will fulfill your intended wishes with respect to your estate plan would be a good choice.

3. Who should I designate as my attorney-in-fact under a POA?

As with an executor, the attorney-in-fact (commonly referred to as “your agent”) named in your power of attorney (POA) should be someone you know and trust. For each type of POA, one for your financial matters and another for your medical matters, the person you choose will be responsible for properly managing all of your financial affairs or potentially making life-changing medical decisions for you if you lose the capacity to handle those matters on your own due to severe illness or injury.

Serving as an attorney-in-fact under a financial POA is a big responsibility, so choosing someone who is financially sophisticated and well-organized is key. Choose carefully a trusted friend or family member for this role who will not feel overwhelmed by handling your affairs, or consider naming more than one friend and family member to serve as co attorneys-in-fact so that they can share the various duties that will fall upon them under you POA.

4. Would it be better to transfer my assets using a Revocable Trust rather than using solely a Will?

The decision to pass your assets to beneficiaries through a trust or a Will depends on which assets you own and their nature. It also depends on your overall planning goals.  Trusts offer a lot more flexibility and options for planning than a traditional Will, such as holding title to your residence so that, after your death (and your spouse’s if applicable), the home can be maintained for the benefit of your children who might need or want to continue to reside in the home after your death with your named guardian, or having the children’s inheritance managed over a longer period of time with specific ages for when a child will receive outright distributions of his/her inheritance.

Depending on what property is held in the trust, your family may be able to avoid probate administration for these assets upon your death.  Trusts also help you maintain a certain degree of privacy, whereas what passes through your Will and probate of that Will is a matter of public record.

5. What are my healthcare wishes?

In the event you become too ill to make your own healthcare decisions, listing your healthcare wishes in an estate plan will ensure you get the care you desire. To begin listing your healthcare wishes, make a note of the type of facility you’d like to live in, such as your home or a hospice and palliative care center.  Investigate pros/cons of purchasing a long-term care insurance plan depending on any history of dementia, Alzheimer’s disease or another degenerative neurological disease.

6. Should I discuss my plans with my family/loved ones?

Depending on your age and medical condition, it may be best to share your estate plan with your family/loved ones rather than simply placing somewhere secure in your home or in a safe-deposit box. At the very least, even if you are not comfortable sharing copies of your signed documents with them, consider giving them a heads-up if they have been appointed to the role of attorney-in-fact or executor, and where to locate your documents should something occur with your health or should you die. Ask them if they are comfortable with the arrangements you want to make, and have discussions outlining their potential responsibilities.

The Law Office of Patricia E. Tichenor specializes in all aspects of estate planning, including providing clients with invaluable free legal guidance on how to avoid probate using trusts, POAs, deeds, as well as key guidance on issues involving special needs trust planning, guardianship and conservatorship for Virginia residents.  For assistance with creating your first estate plan or updating an existing one, contact us today.