Estate planning checklist: documents every family should have

How to organize your financial assets for your family's future

Times of crisis can lead to periods of uncertainty, but these are also opportunities to be more proactive about getting your finances, will and broader estate planning organized. One of the most important things you can do for your family's well-being is to create an estate planning checklist that outlines your long-term intentions, implements a health management approach and organizes your financial assets. Asset distribution and life-and-death medical decisions are complex legal areas — creating a plan sooner rather than later can help to reduce stress on your family and loved as well as increase efficiency and cost savings over time.

Use the following estate planning checklist of documents, and reach out to an estate planning attorney when needed.

Letter of intent

The letter of intent should include how you want certain assets distributed; it can include your wishes for your funeral and burial as well. It should also contain details such as your lawyer's and accountant's contact information, property documents for your real estate holdings, financial account information and account passwords and even insurance policies. You may also include notes about why you've chosen to leave a specific heirloom or other property to a particular person, which adds meaning to the gift and assuages hurt feelings when your estate plan is being executed. This letter is typically not a legal document; however, it can provide clarity for your loved ones and may be brought to bear in potential legal disputes regarding the disposition of your assets. While collecting all of this information may seem overwhelming, you don't have to do it alone. Our Vital Inventory Manager can help you organize your important documents and information so that you and your family can access it easily when needed.

Last will and testament

The last will and testament specifies how you want your property distributed. For example, you may decide to leave it to family members or donate it to charitable causes. If you don't have a valid will, your estate is typically administered and distributed through legal proceedings in court, which means that people you intended to make beneficiaries may not receive anything. To ensure that your will is legally binding, you'll need to work with an estate planning lawyer who will prepare the document and review all relevant gifts and asset classes with you.

If you're concerned about your family having to pay an estate tax upon your death — the federal estate tax applies to estates worth more than $11.58 million for the 2020 tax year — you can work with a tax accountant and financial advisor to strategize how to distribute your gifts to decrease that burden. It is important to remember that your potential state estate tax will depend upon your state of residence and the governing law of your estate plan.

Living will

Your living will should include instructions for how you want medical situations to be handled. This can refer to whether or not you want to be resuscitated, whether you want to be put on respiratory or life support and whether you would want to be put on dialysis. It's important to document these instructions when you're healthy so that your family understands your wishes if something should happen to you. It also alleviates the burden on them of having to make difficult decisions or discern what you'd want once you're already in a dire condition. Your estate planning attorney will prepare this document as well.

Durable Power of Attorney (POA)

There are two types of power of attorney: medical and financial, and you should have both. Although one person can hold both forms of POA, you can also assign those privileges to two different people. The medical POA (also known as a health care proxy) will make decisions regarding your health when you are incapacitated mentally or physically. It's important to tell them how you want your medical situations to be handled and where they can find critical information about your health history.

You should review all medical legal documents with them and update them when you've added new information to that file. To ensure that they will have access to your medical data and that doctors will speak with them about your condition, you should sign a HIPAA release form and include that in your estate planning documents.

Your financial POA will be able to talk with your insurance providers and lenders, and access your bank, savings and investment accounts. As for the documents listed above, an estate planning attorney will need to prepare your POA designation documents.

Beneficiary and guardianship designations

You'll want to review any insurance policies and your retirement accounts (IRAs, 401Ks) to make sure your beneficiary information is current. If you've selected your spouse as your beneficiary, you may want to add secondary beneficiaries, such as your children, in case your spouse passes away as well. Even if you designated beneficiaries when you took out the policy or established the accounts years ago, verify that the information is still accurate. Any discrepancies could create legal problems for the loved ones you are trying to protect.

If you have children under the age of 18, your will should include guardianship designations as well. Without a designation, the courts may be required to intervene and decide who will be responsible for their well-being. Talk with the people you want to designate to ensure they are willing to take on that responsibility. Then make sure those intentions are spelled out in your will.

Getting your will and estate planning documents in order can sometimes be a complex task, so you may want to work with your wealth advisor to get started. They can help you think through your assets, individual circumstances and how you'd like handle the disposition of your assets. While you will need an attorney, and possibly an accountant, to help you manage the legal and financial end, a fiduciary advisor can provide critical support as you navigate these important decisions.

The views expressed in the article are those of the author and/or person interviewed and do not necessarily reflect the views of Silicon Valley Bank, a division of First-Citizens Bank and First Citizens BancShares, Inc. The materials on this website are for informational purposes only, are subject to change and do not take into account your particular investment objective, financial situation or need. Since each client’s situation is unique, you should consult your financial advisor and/or tax planning professional before acting on any information provided herein.