How to plan your estate (in 10 simple steps)
Americans generally agree that estate planning is important—yet only 32% of them have prepared a will or living trust.1 Here are some highlights from a 2024 Care.com study on wills and estate planning:1
- There was a 6% decline over 2023 in estate planning, and a 16% decline over 2023 among lower-income Americans
- Young adults in the 18-34 age category are the only group that hasn’t declined in estate planning rates since 2020
- Since 2020, the number of White Americans with a will is down by 3% while there was an increase of 19% among Black Americans
- 40% of Americans—a 14% increase over 2023—say they don’t have a will due to lack of assets to leave behind
Your estate plan consists of so much more than your financial plan. Financial professionals will tell you preparing a will is essential for protecting your loved ones after you’re gone - regardless of whether or not you’re a high-net-worth individual. However, a will alone is not enough. Your family members will need more information than wills generally include, and they’ll need you to take additional steps to ensure your affairs are in order.
How to start your comprehensive estate plan
If you’ve been wondering where to begin your estate-planning journey, you’ve come to the right place. While there’s no right or wrong way to start, these ten easy-to-understand steps can act as your roadmap for building an estate plan:
1. Inventory your physical assets.
You probably won’t put a list of every single thing you own in your will, but your family will need some things itemized to implement your wishes after you pass. Expensive items are the most important to record, of course, including your home, jewelry, art, collectibles, cars, consumer electronics and power tools. To help ensure you have everything covered, make your list as you go through your house and around your property. If you’d like specific people to have specific items, note that on your list too.
2. Inventory your non-physical assets.
Include all your accounts, such as retirement accounts, bank accounts, investments, insurance policies and so on (e.g., health, long-term care, house, car, life, disability). List the account issuers, account numbers and contact information of the carriers or agents. If you have physical copies of the policies, keep them in a central place and let your family know where they are.
3. Update the list of beneficiaries on retirement and other accounts.
While you’re listing all your pension and insurance policies, review beneficiaries for each of them and add or update names as appropriate. The names you have listed will supersede instructions in your estate plan or will, so it’s important to keep them current as you undergo life changes, such as marriage, divorce, children’s births, etc.
4. Don’t forget debts.
While you might not like to be reminded of your debts, you need to let your family members know what they are. List names, account numbers and contact information for mortgages, car loans, personal loans, credit cards and any other debt (like a home equity line of credit). Debt doesn’t disappear when you die, so try to make it as easy as possible for them to settle these on your behalf.
5. List your memberships and passwords.
We hear stories all the time about survivors who find it difficult or impossible to access a loved one’s online accounts after death because they don’t have the internet addresses and passwords. Leave a list of memberships and subscriptions with usernames and passwords so family members can stop things like automatic subscription deductions and close accounts to preempt fraud. And if your computer is password-protected, be sure to give your family that information too.
6. Simplify your finances.
When taking inventory of your retirement and other financial accounts and policies, simplify them—both to make them easier for you to manage and easier for your family to deal with after you’re gone. Maybe several IRAs or 401(k)s can be consolidated. Maybe some accounts can be rolled over into better-performing options. This is a good step to take in consultation with a financial professional.
7. Tell your family members.
We mentioned this a few times above, but it deserves its own point on this list: Your loved ones should know where to find all components of your estate plan, policies and inventory information when they need it. Talk with them as well about how you’re planning your estate, why and give them the opportunity to ask questions. They may even have ideas you haven’t thought of.
8. Designate your estate administrator or executor.
Many people choose their spouse for this job, and it’s often a good choice—but not always. Consider the likely emotional state of your estate administrator or executor after your death, their own biases and how faithful you think they’ll be in following your wishes. Consider all of your options before making a selection.
9. Complete other important documents.
A will is an important estate planning document to complete, but it’s not the only one. As appropriate, complete a power of attorney, transfer of death designations, healthcare proxy (also called a living will) and any guardianship instructions for children—and don’t forget about pets. Online resources can help you plan your estate, though we recommend working closely with an attorney whenever possible. You can get things organized but there is no substitute for the peace of mind an expert can offer.
10. Discuss with your financial professional.
Think you have it all covered? Are you sure? Remember to check in with your financial professional both when you begin your estate planning process and at key points along the way.
Estate planning doesn’t have to be stressful
Knowing how to plan your estate isn’t intuitive for most people and can be overwhelming. After all, you’re probably not excited about discussing your own mortality. But the reality is that it’s incredibly important and you don’t have to go it alone. Talk to your financial professional about where to start and help ensure your loved ones will have what they need to handle your affairs after you’re gone.