8 estate planning checklist essentials

Whether you're caring for a senior loved one or beginning to think about getting your own affairs in order, estate planning is crucial to ensure your assets pass on to your beneficiaries. There are financial, medical, and legal considerations to take into account when creating an estate plan, so here, we break things down into an accessible estate planning checklist. When you’re ready to create your or your loved one’s estate plan, it may also be helpful to consult an experienced elder law attorney.  

What is estate planning?

Estate planning is the process of deciding how one's assets, medical care, and/or guardianship will be handled should they become incapacitated or die. A more comprehensive plan than a will (which is one component of an estate plan), an estate plan lays out a plan not only for assets but for important medical and legal decisions.

Having an estate plan is essential for senior loved ones as they age. It can provide peace of mind for both older adults and family caregivers because it answers hard questions like what someone would like to be done in certain medical situations, how they'd like their will and testament to be carried out, and how they'd like funeral arrangements handled.

While it may be difficult to talk about some of these things with loved ones, an estate plan lays it all out transparently so nobody has to make uncomfortable decisions.

Estate planning checklist

Creating an estate plan is an important task for anyone as they age. It's never too early to start estate planning preparation, but most begin thinking about it soon after having kids or as they reach retirement age. Here's a checklist to help you or your senior loved one get started.

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Take inventory of your belongings

While not every single item may be worth noting, it's important to have a comprehensive breakdown of assets so that they can be found after a loved one's passing. This inventory should include both tangible and intangible assets, as well as liabilities.

Assets may include cash, stocks, valuable physical items, real estate holdings, and more. Liabilities may include debts, mortgages, or taxes still owed. This inventory will be very important for the next step.

Create a last will and testament

People sometimes conflate a will and an estate plan, but they're different things. A will is just one part of an estate plan. But, it is a very important part.

A last will and testament designates beneficiaries who will inherit assets, distributes real estate holdings, and elects guardians for underage kids. This document facilitates passing on assets and ensures that valuable and sentimental items remain in the family.

In the will, it's important to name an executor to streamline the process of reallocating assets after death.

Consider a living trust

A living trust is a legal document that helps protect assets and govern how they are distributed after the trust owner’s death. When moving assets into a living trust, they become protected and managed by a designated manager, known as a trustee. The trustee is someone chosen by the trust owner to manage and control the assets in the trust after the owner dies. The trust's owner may set rules to dispense assets to beneficiaries while they're still alive and can help avoid frustrating posthumous conflicts like probate court.

There are two types of trusts: revocable and irrevocable. As the names suggest, revocable living trusts permit changes or the revocation of the trust during the owner's lifetime. An irrevocable trust does not permit changes.

Choose a power of attorney (POA)

A power of attorney (POA) is a person designated to make decisions on another's behalf. It's essential that senior loved ones have a trustworthy POA who will carry out their wishes if they're no longer able to express them. 

There are a couple of different types of powers of attorney, such as durable, springing, medical, or limited. A medical POA may also be called a healthcare proxy. Having POA in place gives a designated agent, such as a trusted family member or friend, the ability to make financial decisions, such as help with managing bank or investment accounts. A medical POA allows a designated agent to make healthcare decisions, such as treatment and medications, long-term care, use or withdrawal of life-saving measures, and end-of-life care. As always, it’s best to consult an experienced elder law attorney when deciding what kind of POA to draw up. 

Prepare a living will/healthcare directive

While a POA or healthcare proxy may be trusted to make healthcare decisions on someone's behalf, another option is to prepare a document with more specific instructions. A healthcare directive specifies medical preferences for end-of-life care, like the type of care one would like to receive, the types of facilities they approve of, and what they'd like to have done in specific situations.

It's a good idea to have conversations with family members and a healthcare professional before creating this document. Not only will it help ease the burden of family members having to make those decisions themselves, but it will help everyone think through all the potential scenarios that should be addressed in the directive.

Plan for estate taxes

There are both federal estate taxes as well as state estate taxes or inheritance taxes. The federal estate tax is assessed on estates worth more than a certain amount. The fair market value of cash and securities, real estate, insurance, trusts, annuities, business interests, and other assets are all taken into account — this is known as your "Gross Estate."

After subtracting deductions like mortgages and other debts, estate administration expenses, property that passes to surviving spouses, and qualified charities, you'll arrive at your "Taxable Estate."

In 2025, if the Taxable Estate is worth more than $13,990,000, you must plan to pay estate taxes that will reduce the value of assets transferred to beneficiaries. Currently, 12 states and the District of Columbia also assess estate taxes, while six states assess an inheritance tax on beneficiaries. Maryland is the only state that has both an estate tax and an inheritance tax.

Some of the most common ways that individuals reduce estate taxes are through charitable giving, setting up an irrevocable trust that pays out during their lives, or establishing an irrevocable life insurance trust.

Organize digital assets

Both the executor of the estate and other family members or loved ones need to be able to find assets after someone's death. In today's digital world, we sometimes overlook how important it is to have our accounts accessible in the event of our death.

As such, an important part of an estate plan is to organize all online accounts and passwords and make them accessible to a trusted individual. A good way to do this is to move everything into a password manager app and provide someone with the master password.

Update documents periodically

An estate plan is made for death, but it's managed in life. As such, things may change over time. It's important to review the plan after major life events like births, marriages, divorces, and other deaths in the family. 

It's also a good idea to set a regular schedule to review the plan and make any necessary updates. Checking every few years is fine when you're younger (and fewer milestones are occurring), but as you get older, it's a good idea to check annually. You never know when you might want to make a change.

Start creating your estate plan today

An estate plan is an essential asset for any family, especially if you have considerable assets to manage. This guide will help you and your family create an effective estate plan that accounts for everything. For more guidance on family and financial planning, visit the Greenlight Learning Center.

FAQs

What is the 5 or 5 rule in estate planning?

The 5 or 5 rule is a trust clause that gives beneficiaries the choice to withdraw a specific amount of money from a trust each year. This is only available when a trust has been established, but it permits a beneficiary to withdraw either $5,000 or 5% of the trust's fair market value each year, whichever is higher. This rule is also known as the "five or five power."

What affairs need to be in order for the future?

Getting affairs in order proactively can help families focus on what matters most during their senior loved one’s golden years, like spending quality time together. An estate plan puts in place financial considerations, like who will inherit certain assets and real estate properties; medical considerations, such as who will make decisions about end-of-life healthcare; and practical considerations, like where to find keys to properties and online account information.

What does a basic estate plan include?

A basic estate plan should include a last will and testament, elections of a power of attorney and/or healthcare proxy, a healthcare directive, and information on where to find important information like online account passwords. It should also include any final wishes, like donations to make to charities, plans for estate taxes, or any wishes that should be conveyed to family members or friends.