Basics on estate planning: 10 aspects to look at (Part 1)

Justice gavel and last will and testament document on wooden table
Last Updated on March 9, 2023 by Carlos Lopez

A few days ago I talked to you about es tate planning and some minor aspects of it, today I want share information about what consider to be the first 5 basic aspects that you should take into account when talking to your lawyer and start this process.

Without further ado, below you will get the content you are looking for to guide in this matter:

1. First of all: Inventory all your stuff.

Often, most people do not realize what possessions they have until it becomes necessary to create a detailed list of them, I invite you to take a look around your home and start making that list.

Start by going through your entire home (inside and outside) and if it’s easy for you, fill out an Excel file with all the valuable items you find. You can classify your assets into tangible and intangible.

Examples of tangible assets:

  • Houses, land or any other type of property.
  • Vehicles, this includes automobiles, motorcycles, boats, airplanes, etc.
  • Collectibles: for example: paintings, sculptures, antiques, coins or collectible cards
  • Other types of personal possessions: jewelry, specialized electronic devices, etc.

Some examples of intangible assets:

  • Stocks, bonds, cryptocurrencies and mutual funds.
  • Health savings accounts
  • Life insurance policies
  • Corporate retirement plans and individual retirement accounts
  • Business ownership interests

Surely taking into account the above, you will find that the list is long, take advantage of the digital file you carry to create a column where you can put the name of the person to whom you would leave an item after your death (a first idea, not something definitive)

2. Create your legal directives

For your estate plan to be complete, it may include the following legal directives:

Establish a trust. By using a “living revocable” trust, it is possible to assign portions of your estate to certain things while you are alive. In the event of illness or incapacity, the person in charge of the trust can take over.

After your death, the trust assets will pass to the beneficiaries you have designated, without going through probate, which is the judicial process that could otherwise redistribute your property.

There is another option and that is the irrevocable trust, where the creator (you) cannot change or revoke once probate is granted.

A second directive to handle is the health care directive, also known as a living will. With it you will be able to detail what to do in medical situations where you cannot make the decision yourself (for example, if you become vegetative or have a disability that does not allow you to communicate and express your wishes).

It is possible to grant a medical power of attorney to a person you trust completely, so that he or she will make those medical decisions when you are not able to.

The above two documents can be combined into one, known as an advance health care directive.

Create a durable financial power of attorney, this will allow someone else to manage your financial affairs in the event that – medically – you are unable.

This designated person will be able to act on your behalf in financial and legal situations when you are unable to, some of the activities they will be able to perform include paying bills and taxes, as well as accessing and managing all of your assets.

Finally, draft a limited power of attorney.  If you think giving someone else power of attorney to handle all your stuff is risky, use this option.

This document does exactly what its name implies: it takes care of putting limits on the powers of your designated representative. A quick example of this would be that the document could give that person the power to sign closing documents for the sale of a property on your behalf, or to sell shares that are also part of your assets.

Always keep this in mind: you should be careful about the people to whom you grant a power of attorney because they can manage your financial well-being and do with it as they wish.

3. Create a list of your debts

What can you include in this list? Remember that you can keep track of all of these in the Excel document you created in point 1.

  • Open credit cards
  • Auto loans
  • Mortgages
  • Home Equity Lines of Credit (HELOCs)
  • Other current debts you have acquired

In your Excel file, add the corresponding account numbers, the location of the signed payment agreements and also the contact information of the entities with which you have the debts.

Regarding credit cards, you should include all of them, indicating in the file which ones are frequently used and which ones you keep as a reserve (or hardly used).

4. Write a complete will

As a general recommendation, if you are over 21, you should have a will.

A will is the set of rules that will set forth your wishes for the distribution of assets to avoid quarrels and major problems among your heirs. In it you can also designate a guardian for your minor children and for them to take care of your pets at the time of your death.

If you want to leave your possessions to charitable organizations or entities, this can be done in the same way when drafting your will.

Having a properly drafted will is not expensive, you can get estate planning will attorneys who for a fair price will draft that document for you, keep in mind that the cost may depend on how diverse and complex your possessions are and where you are located.

If you don’t want to use a lawyer, you can find sites on the Internet that will help you draft it following certain patterns of documentation and basic questions.

Something very important to keep in mind is that you must ALWAYS sign and date your will, this must be done in front of two unrelated witnesses (who will also sign the document), finally, it is mandatory that this is notarized.

One last piece of advice at this point, for greater security, let other people (preferably trusted ones) know the location of the will in case it is necessary to access it and you are unable to do so for some reason.

5. Form a professional team to help you in the event of death or diminished capacity.

In most marriages, one spouse usually handles the main checkbook and is primarily responsible for the investments that are made.

If you think you fit that profile, think about how your assets and accounts will be handled in the event of your death. If you want to take it to another level, imagine that you become disabled and cannot manage your investments, accounts or property.

Don’t you think it would be better to know that if you die, your spouse and children will have access to a group of professional advisors who will know your finances and estate plan very well?

Such a team could consist of your spouse, accountant, attorney and a financial advisor and they would have access to your estate plan. It doesn’t matter that the team you form will not be used in the present, but you can rest easy knowing that if you fail your family, they will be able to live a life safe from financial problems.

Estate Planning Lawyer in Washington, D.C.

At Lopez Law Firm LLC we will make that your estate plan meets all the necessary aspects so that it can be executed smoothly when the time comes. Schedule your consultation today!