Estate Planning Guide 101: A Basic Guide To Establishing Your Estate

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Although often neglected, drawing up an estate plan is as essential to your legacy’s future as drawing up a simple will. A trust, or estate, is not the same as a will - and both are strongly encouraged for financial legacy planning.

Below is a basic guide for establishing your estate.

Ask The Hard Questions

How is my situation different from any other situation?

Regardless of how “normal” you might feel your life is, everyone has an aspect of life that does not fit perfectly into the commonly circulated formula for any sort of planning.

Are you childfree? Are you planning with an elder parent? Do any of your potential beneficiaries have special needs that must be taken into consideration? Are any of your beneficiaries minors? The first step of planning is to take a moment to consider what makes your situation unique.

Outline Your Estate

It's important to outline your current net worth. Forbes describes this equation as “Net worth = assets – liabilities.”

CFA Elizabeth P. Anderson explains, “On the asset side (what you own), these records include bank statements, investment statements (such as from mutual fund accounts and retirement plans), trust assets and business interests. Appraisals of personal property if appropriate and estimates of the value of other tangible property, such as real estate, should also be included.”

Anderson continues by clarifying what constitutes the liability side of the equation. “The relevant documents include credit card statement, mortgage statement, tax bills, student loan statements, business loan documentation, and any other evidence of indebtedness.”

Once you account for your living expenses, you can then determine what can be passed along to your beneficiaries, and whether you should gift during your life.

Name Your Beneficiaries, Divvy Out Assets

The third step in estate planning is to determine who will be the recipients of your estate. This step is extremely personal and needs to be handled with care. It is at this point in the planning process that you will decide how much of your estate will go to family and how much will go to charity.

In considering your heirs, will your assets be divided equally? Will your children who have their own children be given more than your childfree children? Will you favor certain heirs over others based on need or merit?

In another article for Forbes, Anderson provides some advice to keep in mind, “As you work through these decisions, remember that your assets are yours, and you are free to dispose of them as you see fit. While you can control what and how you give, you cannot control the reactions of the recipients, how they treat the assets, or how they treat each other.”

Naming Your Trustee

While the most emotionally burdensome decision you make might seem to be Step 3, be aware that naming your trustee needs to be handled with the same amount of care. Sheryl Nance-Nash describes in a Forbes article that this is one of the most common mistakes made in estate planning. “Selecting the person who will be in charge of your affairs is no small decision. You don’t want to choose someone for an arbitrary reason, like going with the oldest child simply because he is the first born.”

Keep in mind that naming your trustee involves a deep level of trust, responsibility, and foresight. Do not falter or be swayed by emotions.

Hire A Lawyer

Once you have gone through these initial four steps, the process of completing the legal documents will become much simpler. There are plenty of online resources available to help you find a planning professional, such as or FindLaw.

As you begin planning your future, keep in mind that these decisions are difficult, must be handled with care, and deserve your attentive consideration. Do not leave planning your will or estate for a future date. Take the time to outline the details of your legacy now.

Finally, remember that it is possible to add addendums and make changes while you are still alive, but impossible to draw up the legal documents for a will or trust once you are gone.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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