Your Guide To Basic Estate Planning In 6 Steps

“Death is not the end. There remains the litigation over the estate.”

Ambrose Bierce

Have You Created An Estate Plan?

Most of us want to avoid litigation, especially over an estate. Having a plan helps you do that. The best time to think about your plan is when you don’t have a compelling reason to do. Keep your family’s best interests at heart with a well-developed estate plan. Estate planning will give you control over your asset distribution during your lifetime to your loved ones.

A significant portion of your assets can be easily transferred to your intended heirs, avoiding often painful and lengthy probate court procedures. It is a good idea to sit down with an estate planning attorney or a tax attorney who is familiar with asset protection and tax planning. You may have questions about federal estate taxes. You can consult the American Bar Association for estate planning articles or find an estate planning attorney.

What Is Part Of Your Estate Plan?

To design your estate plan in 6 steps, we address the following:

  • Organize your assets into the non-probate property.
  • Know who your designated beneficiaries.
  • Determine if you have joint ownership with rights of survivorship.
  • Set up your will for probate property.
  • Have a letter of instructions to loved ones.
  • Consider a trust if appropriate.
  • Donate assets to your charity.
  • Health care proxy or advance directives documents are essential.
  • Testamentary Letters.


Having a plan is essential for your family and is in their best interests. Yet, only 40% of US adults have created a will or a living trust. Even younger people, especially if they have young children, can benefit from putting together an estate plan.

6 Reasons Why You Need An Estate Plan

#1 Assure financial support for your surviving spouse, children and grandchildren, and even later generations. The passing of a loved one is stressful and often traumatic. Adding financial stability is helpful.

#2 Write out your wishes while you are of sound mind. We never know when our mental capacity diminishes through tragedy, or of aging.

#3 Avoid litigation for your family in the future. Make your intentions for distribution known, so your loved ones don’t have to fight out in probate court. That path takes time and is costly.

#4 Arrange your estate plan with capable professionals to steer away from the potential publicity that can sometimes accompany the passing of a loved one.

The Great Aretha Franklin died in 2018 without a trust or will, forcing her sons to file documents in a probate court in Michigan. Prince’s estate was not covered by a plan when he died in 2016, and the distribution of his assets will likely take more time and more public scrutiny. Just recently I read there are questions arising about Nina Simone’s estate, and she passed away in 2003.

#5 Minimize estate taxes and costs when it is time for asset transfers.

#6 Support a favorite charity, address pet care and consider digital assets.

How To Start Your Basic Estate Planning

Start discussions with your estate planning attorney, tax accountant, and financial advisor. Through frank discussions, your goal is to put together the most beneficial plan for your situation at the most effective cost. Make sure that you consider your digital assets in your will, which we fully address in this post.

You built your wealth. Now you want to distribute your assets according to your wishes properly.

Carry out estate planning for your family, make sure your assets go where you intend them to go and that the person you expect to be the executor of your will, will be the one responsible for administering your estate will be that person. Pick your potential executor.

A Simple Estate Planning Guide In 6 Steps:


Step 1

Set up most of your assets as non-probate property. These assets outside the will and, for many of us, are the bulk of our estate. 

This property will automatically transfer to your designated beneficiaries upon your death rather than through your will. One of the most important assets you will need to address is your home (e.g., house, condominium, cooperative, vacation home) unless you rent only.

Your non-probate property is an asset that will transfer to survivors by contract based on your designated beneficiary. Name beneficiaries for all of the assets that you can.

Your Non-Probate Assets Will Include:

  • retirement accounts, including 401(k) plans,
  • IRAs, pension plans,
  • payable-on-death clauses in bank accounts, investment portfolio(s),
  • life insurance policies or
  • by owning accounts with another person, usually a family member,  through rights of survivorship.

These assets are generally transferred directly to those beneficiaries that you designated. At the time you opened these accounts, you likely wrote out your beneficiaries on a legal form.

Review Beneficiary Designations Periodically

You may want to change your beneficiaries as you go through life.  For example, if you designated your mom when you first set up your accounts, it is probably a good idea to refresh your beneficiaries. Often, after life changes such as a divorce, remarriage, or the passing of a loved one, we want to update our beneficiaries. Sometimes we can provide for a contingent or secondary beneficiary. To understand the importance of designated beneficiaries, please read here.

Joint ownership with rights of survivorship

Husbands and wives (or parents and children) may have joint ownership of assets called joint tenancy with the right of survivorship.

Make transfers by property ownership designation. These assets can include bank accounts, investment accounts, cars, and home(s). Upon the death of one owner, the surviving owner(s) will receive this property by operation of law rather than through the will.

These assets will be a majority of our assets, and their transfer is simple.

In most cases, your intended recipient need only present an official death certificate, and the bank, for example, will transfer funds or property to his or her name in the ordinary course of business. These assets do not pass through the will or the probate process.

Step 2


Set up your will for probate property

A Will, or often known as “Last Will and Testament” is a formal written document that directs how assets not addressed in Step 1.  Upon the death of an individual, the distribution of these assets occurs. 

The individual making the will is called the testator. He or she decides who gets their remaining assets after their death.

Appoint a personal representative, commonly called an executor, and give the executor the powers necessary to fulfill your wishes. Without a will, your state’s intestacy laws will dictate how your assets are to be distributed.

Don’t have co-executors

Sometimes people opt for co-executors, such as a  spouse and an adult child they believe can work in unison. Relatives and friends are not great choices to perform the executor’s duties.

Choose one trustworthy executor. While co-executors may sound harmless, acting in unison, in reality, can be more difficult. Executors may be called on to pay off debts, liquidate assets, file tax returns and estate tax returns. They may need to get the court’s permission to distribute the balance of the remaining assets, including money.

Spouses have legal rights to each other’s estates

State laws presume that married couples share their fortunes equally.

Sharing your property with your spouse is a right. This property sharing is called “the partnership theory of marriage rights.” Property acquired during the marriage and titled in one partner’s name (except for property acquired via gift or inheritance) becomes property of both spouses typically. Any spousal rights to claim an inheritance from the other spouse under the law are void upon divorce.

The estate assumes any debts of one spouse, not personal liabilities of executor or the beneficiaries.

There are nine community property states where all the money, assets, and debts acquired during the marriage are legally part of the joint property of both spouses. The rights of husbands and wives are equally protected.


What A Will Does:

  • Decide what property, including personal property that has sentimental value.
  • Determine who will inherit the assets.
  • Designate a trustee and guardian to manage assets if there are children under 18 who may be beneficiaries under your will.  The trustee and guardian can be the same.
  • Handle digital assets that may need you to designate access to family members to see your social media accounts. Digital assets are a broad category and include new types of assets like cryptocurrencies and non-fungible-transfers (NFTs).

For your will to be effective and valid, the will must be signed according to your state’s law.

Generally, a will must be in writing, signed before a minimum of two witnesses who can attest to your mental capacity and soundness at the time of signing the will.

You want a valid will 

You should challenge-proof your will with your attorney’s guidance. The will becomes effective upon the death of the testator. Up until that time, you can change a will as often as you want. The original (not copied) version of the last will should be kept intact and often stored in a safe deposit box or safe place.

Step 3


Leave your letter of instructions.

Write a letter of last directions, separate from your will, that may provide your preferences regarding funeral and burial arrangements, who speak at your funeral, contact information for family, friends, colleagues, and such.

There may be items that weren’t part of your will but are essential to you to let your surviving family members know of their existence. If any instructions conflict with the direction provided by the will, typically, the will overrides the information in this letter.

Leaving Guidance For  Family Is Helpful

Organize financial information, people to contact, essential papers (this could be in the form of a memoir, for example), and provide the location of where your family may find these things. This letter doesn’t have the legal force of the will but may amount to personal information that the family could use and you wish to share.

Step 4


Who Should Consider A Trust?


Trusts have additional features not found in wills.

Most people know what a will is, and it is the first place to handle probate property, but trusts are increasingly more popular in estate planning. Use trusts when you have a more complex estate, have less liquid assets, and desire privacy as trusts avoid probates. Trusts provide some features that a will won’t.

Living Trusts

Before death, you can use a trust as a living trust.  These instruments can take effect while the grantor is alive and can give the grantor the right to make changes. These are called revocable living trusts, and the grantor can be the trustee. However, if the grantor cannot serve because of becoming incapacitated, someone you appoint can name a new trustee.

Living trusts can also be made irrevocable, meaning no changes can be made by the grantor.

Irrevocable Charitable Remainder Trust (CRT)

People who have significantly appreciated assets may want to consider setting up a charitable remainder trust. A CRT is an irrevocable trust that generates a potential income stream for you as the donor to the CRT or other beneficiaries. The remainder of the donated assets goes to your favorite charities. There are several benefits, substantial income tax deductions while preserving the value of your assets. You can read more about it here.

Donating Assets To a Charity

CRTs are tax-exempt irrevocable trusts that reduce the taxable income of the donor during their lifetime. The irrevocable donated assets go to the trust. Distributed income moves from the assets to you and your spouse for a set period or life. The charity you designate will receive the CRT assets when you or your spouse die.

Testamentary Trusts

A different kind of trust is the testamentary trust, usually contained in wills that go into effect after the grantor’s death.

Step 5

Living Wills and Medical Powers of Attorney

 Prepare health care proxies, often called advance medical directives, that is, a living will and your durable powers of attorney.

Write a living will detailing a person’s desires regarding medical treatment when they may no longer express their wishes. The living will provides informed consent.

A living will is separate from your will made in consultation with your attorney and signed by you. This medical directive can help reduce ambiguities during a difficult time using feeding tubes, for example, and keeping a loved one alive unnecessarily.

The Terri Schiavo case

Does anyone remember the legal battle in 2005 surrounding Terri Schiavo? Terri Schiavo was a legal case that spurred a right-to-die movement. As a result of her family’s tribulations, many people recognized a living will as an important document. While challenging, it provided urgent awareness of why you need to address these possibilities. Health care directives are critical parts of your estate plan.

Use the durable power of attorney to appoint someone you trust as your agent, do certain things, and take actions in your name if you cannot do so. This agent is also called “attorney in fact.”

When the grantor is incapacitated or disabled

Under a power of attorney, the agent can bind you to contract obligations, sell, buy or close title to real property in your name, conduct banking, or other transactions. Every state has its requirements for ensuring valid powers of attorney. These powers are “durable,” which means that the agent’s authority survives any incapacity or disability of the grantor. The point is not to go and buy a form online or at a store. You need to designate someone trustworthy.

These powers come into use when the grantor cannot physically appear at a bank, through injury, confinement, or frankly just does not want to go. This instrument is crucial when caring for a person with dementia, Alzheimer’s Disease, or other limited mental capacity diseases. The most common uses of this power of attorney are in banking and real estate transactions.

Step 6

Upon your death, your executor will become the administrator and fiduciary of the will effectively.

After appointing an executor, the probate court will confirm the appointment upon your death. The executor’s role is to be effective and he or she can be expressly relied upon by financial institutions and insurance companies.

This executor will submit a petition to the probate court in the jurisdiction where the testator passed away. Assuming no challenges, the court will formally appoint the executor by issuing Letters Testamentary.

Testamentary Letters

Usually, third parties require original letters, so you have to get these directly from the court. They are not available online. These letters are court documents that allow the executor to act as a fiduciary under the supervision of the court.

These testamentary letters, along with the legally binding death certificate, are the essential documents that give the executor the force to deal with potentially numerous parties that have an interest in your estate.

Final Thoughts

Estate planning decision-making can be complex. However, it provides peace of mind by reducing some of the uncertainty that may arise for your family. Estate planning is in your family’s best interests.

Protecting your assets and having a plan to distribute them to loved ones should reduce potential angst that may follow. Engage a tax accountant with a CPA to help you realize tax efficiencies, an important component of estate planning.

Have you started thinking about estate planning? It is usually easier to do when you have no urgent reason to do so but are thinking of your family’s best interest. This guide should move you to think about your plan but you need careful consideration and professional guidance.

Please share any thoughts or comments you may have. We would love to hear from you! Please visit The Cents of Money for other articles of interest.



1 thought on “Your Guide To Basic Estate Planning In 6 Steps”

  1. I appreciate that you mentioned that when you have an attorney help you with estate planning, you can challenge-proof your will. My dad has been thinking that he needs to start planning out his will and what he is going to do with his estate because he is starting to get older, and he wants to make sure that everything will be in place when he passes away. I think it would be smart for him to look into hiring an attorney to help him so that he can make sure everything will be done clearly and correctly, and that my siblings and I won’t have anything to dispute when he’s gone.


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