Estate planning

What is estate planning?

What is estate planning?
Estate planning helps protect your family and your legacy with a plan for what happens in the event of your death or incapacitation.

Proper estate planning helps ensure your assets are accessible and accurately distributed without unnecessary fees and taxes.

How can I get started with estate planning?
There are many estate planning options, so the first step in creating the right plan is setting up a team of experienced professionals that can help you.

Start by finding an estate attorney and a CPA that you trust, and then talk with your Edward Jones financial advisor about a strategy for your financial accounts.

Estate planning may look different from one person to the next, but most estate plans account for:

• Planning the distribution of assets to beneficiaries
• Creation of a will that states how assets are distributed
• Creation of a living will to protect the individual if they are incapacitated or unable to communicate
• Designation of trustees to manage the financials for beneficiaries
• Selecting who will have power of attorney
• Planning for estate taxes and other tax situations
• Designating guardians for minor children

A well-organized estate plan comes together when properly planned and executed. To help you get started, follow these steps.

1. List assets and debts

Start your estate planning by listing all your assets and liabilities. Your list of assets should include how the ownership of each asset is currently registered. When considering assets and liabilities, be sure to include:

• Homes, including mortgages
• Retirements accounts
• Bank accounts
• Investment accounts
• Cars and vehicles, including loans
• Health savings accounts (HSA)
• Life insurance policies

2. Create a will

Drafting a will lets you specify exactly how your assets are distributed to your beneficiaries. Importantly, it’s where you can name guardians for any minor children. When creating a will, choose an executor to manage your estate and carry out the details of the will. If you need help creating a will, consider working with an estate planning professional.

3. Establish trusts as needed

Depending on your situation, creating trusts may be an important step of estate planning. Trusts are useful for achieving specific estate planning goals, like avoiding probate, providing privacy. But you can't name guardians for any minor children in a trust, and drafting one is generally more expensive than with a will. Wills and trusts are different, so consider both during estate planning. Edward Jones Trust Company can help you determine if a trust is right for your situation and goals.

4. Designate your beneficiaries

You may designate non-probate beneficiaries on some of your assets such as insurance policies, retirement accounts, bank accounts, brokerage accounts, vehicle titles, and in some states, real estate. Assets with a non-probate beneficiary designation pass outside of probate and are not governed by your will. They pass directly to the designated beneficiaries after your death. Over time, and especially at milestones (births, deaths, divorce, etc.), consider revisiting or updating your beneficiary designations to ensure your assets go to the individuals you intend.

5. Consult a financial advisor

Planning an estate can be complicated, especially for large estates with a mix of assets and multiple beneficiaries. Your financial advisor can work with your tax, legal and estate-planning professionals to help ensure you have an estate plan that matches your goals. Your financial advisor can also work with you to ensure ownership of your financial assets and/or beneficiary designations applied to them are consistent with your estate plan.

6. Revisit and update your estate plan

As your estate grows along with the size of your family and life events occur, updating your estate plan is essential. You don't want to forget any new family members, and new assets may not be considered under the existing estate plan. In general, plan on revisiting your estate plan every several years to keep it up to date.

What is the purpose of making an estate plan?

An estate plan outlines what happens to your estate in the event of your death or incapacitation. Creating an estate plan can financially secure and protect your loved ones.

Is estate planning only for the wealthy?

No, this is a common misconception. Many people can benefit from estate planning. The truth is that by not putting your own plan in place, you have a “strategy” by default: the laws of your state.

What is the difference between a will and estate planning?

Drafting a will is an important step in estate planning. While a will is a legal document that outlines what happens after death, it's only part of an estate plan. An estate plan accounts for even more, including establishing trusts and other legal documents such as powers of attorney which address your needs in the event you become incapacitated.

Who usually inherits an estate?

You can choose anyone to inherit your estate. However, you must establish your choices through estate planning documents such as wills and trusts. If you don't, then state laws will dictate who inherits your assets after death. Many estate plans split assets among loved ones. To help ensure your estate goals are met, consider working with a financial advisor.