Estate Planning Checklist: 8 Essential Steps to Protect Your Assets

Imagine this.

You’ve worked hard your entire life to provide for your family and build a legacy. Your home, investments, business – they are the fruits of years of labor and love.

But what if something happened to you? Would your family be protected? Would your assets be preserved? Also, Would your wishes be honored?

With proper estate planning, the legacy you’ve built could be manageable. Your loved ones may suffer through a painful probate process. Taxes and court costs could drain your assets. The people entrusted with decision-making powers might be different from who you would have chosen.

We’ve seen this tragedy play out too many times. But with the right estate plan in place, you can prevent it.

Keep reading as we walk through the essential steps for creating an estate plan that secures your legacy. With a proactive plan guided by experienced estate planning attorneys, you can gain peace of mind knowing your loved ones and assets will be protected.

Why You Need an Estate Plan

When you die, an estate plan will ensure that your assets are distributed in line with your wishes. It also designates someone you trust to make decisions on your behalf if you become incapacitated.

The core elements of an estate plan include:

Will
Trusts
Healthcare and financial powers of attorney
Beneficiary designations
Letter of intent

Without these legal documents guiding your wishes, here’s what can happen:

Your assets will go through probate, which is public, expensive, and time-consuming.
The state will decide how your assets are distributed.
The court will appoint guardians for minor children and conservators for adults.
No one will have legal authority to make decisions if you become incapacitated.

The consequences can be devastating. Estate planning gives you control over what happens to your legacy.

Crafting a plan is especially crucial for Colorado residents. Our state has complex laws regarding estate taxes, probate procedures, and trusts. Navigating these nuances requires expertise.

Now, let’s walk through the step-by-step process for creating your estate plan.

Step 1: Take Inventory of Assets

The first step is listing all of your assets. This inventory helps determine the value of your estate and what needs to be accounted for in your plan.

Be thorough and include:

Real estate
Bank accounts
Investment accounts
Retirement accounts
Life insurance policies
Vehicles
Valuable personal property

Also, account for liabilities like mortgages and credit card balances.

Having an accurate picture of your net worth allows us to craft suitable estate planning strategies to protect your assets and minimize taxes.

Step 2: Choose Beneficiaries

One of the most critical estate planning decisions is choosing beneficiaries. These are the individuals or entities who will inherit your assets when you pass away.

You’ll need to name primary and contingent beneficiaries for accounts like:

Retirement plans – 401(k)s, IRAs
Life insurance policies
Payable on death bank accounts or investments
Real estate held in transfer on death deeds

When selecting beneficiaries, consider factors like:

The age and maturity levels of potential beneficiaries
Any special needs that would require ongoing financial support
Relationships between beneficiaries and potential family conflicts

By thoughtfully choosing beneficiaries, you can ensure your assets are distributed as intended.

Step 3: Select an Executor

You will name an executor to oversee the carrying out of your wishes after you pass away. This involves tasks like:

Filing your will with the probate court
Managing your assets
Paying debts and expenses
Distributing property to beneficiaries
Filing final tax returns

Look for an executor who is organized, responsible, and trustworthy. Many people name their spouse or adult child as executor. You can also appoint a trusted family friend, professional advisor, or corporate trustee.

Step 4: Pick a Guardian for Minor Children

If you have minor children, your estate plan should name a guardian to raise them in the event of your death. Discuss your choice with the guardian before calling them in your will to confirm they are willing and able.

You can also name backup guardians in case your first choice is unable to fulfill the role. Selecting guardians for your children is a decision that requires careful thought.

Step 5: Make Healthcare and Financial Powers of Attorney

Powers of attorney authorize someone to make decisions on your behalf if you become incapacitated.

For medical decisions, you would create a healthcare power of attorney, also called a healthcare proxy. This outlines your preferences for treatments and end-of-life care. Your agent can then make decisions aligning with your wishes if you cannot do so yourself.

For financial decisions, you would create a durable economic power of attorney. This allows your agent to handle money matters like paying bills, managing investments, filing taxes, and accessing accounts.

Powers of attorney are powerful legal documents—only name agents you trust fully who understand your values and preferences.

Step 6: Draft Your Will

Your will is the foundation for directing what happens to your estate after you pass away. Here are crucial elements to include:

Name an executor – The executor oversees the carrying out of your wishes.
Name guardians for minor children – If applicable, designate guardians to raise your children.
Distribute property – Specify who receives your tangible personal property like furniture, jewelry, art, vehicles, etc.
Name beneficiaries – Indicate who inherits the residual value of your estate.
Make gifts – You can leave gifts of money or property to individuals or charities.
Disinherit Someone – Specify if you wish to exclude someone from inheriting.

Your will should be customized to your unique assets, relationships, and intentions.

Step 7: Set Up a Living Trust

Trusts are valuable estate planning tools that provide control and protection for your assets. The most common is a revocable living trust.

Benefits of living trusts include:

Avoiding probate – Assets in the trust don’t go through probate after your death.
Privacy – Trusts aren’t public like probate proceedings for wills.
Control – You determine how assets in the trust are managed and distributed.
Incapacity planning – A successor trustee can take over managing the trust if you become incapacitated.
Consolidating assets – Retitling accounts and property to the trust makes them easier to administer.

Our estate planning attorneys can help you determine if a living trust aligns with your goals and draft customized documents.

Step 8: Sign Your Documents

Once your estate plan is complete, the next step is to sign your documents correctly. Requirements vary by state.

For example, in Colorado:

A will generally requires two adult witnesses who watch you sign.
Powers of attorney need one witness.
Advance healthcare directives should be notarized.
Living trusts require the grantor and trustee’s signatures.

Following the proper formalities ensures your documents are legally valid.

Maintaining Your Estate Plan

Estate plans need to be set-it-and-forget-it. They require periodic reviews and updates to keep current.

Aim to review your plan every 2-3 years and after significant life events like:

Marriage or divorce
Birth or adoption of a child
Death of a beneficiary
Changes in your health
Buying/selling property
Moving to a new state
Significant increases or decreases in wealth

Your estate planning lawyer can help analyze if any changes are needed to align with your evolving needs and circumstances.

Start Planning Your Legacy Today

Hopefully, this overview gives you a starting point for creating your estate plan. But this is just a broad outline – your unique situation requires personalized strategies and documents.

The attorneys at Hammond Law Group have years of combined experience helping Colorado families plan their legacies.

Whether you need help getting started or reviewing your existing plan, they’re available to provide trusted guidance every step of the way. Contact their team today to schedule your consultation.