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Estate Planning Checklist

Posted September 30, 2018

So often the first and unfortunately last consideration is a Will when people review an estate planning checklist. It is a common misconception to think that a Will avoids probate, and that a Will is the only document needed to properly handle an estate. Not so much. Even a testamentary trust which is created within a Will must go through the probate process. We’ll chat about the basics of probate in a bit- back to the issue at hand which is estate planning checklist.

The first item on an estate planning checklist is a financial team that you can trust- a tax professional, a financial advisor, and of course an estate planning attorney. Why run through a a bunch of financial and estate planning objectives without a solid team? After that, here are some considerations-

Draft A Will

Again, a Will does not avoid probate but it is necessary to tell the probate courts who gets what and who will serve as a Guardian to your minor children. A Will can also create a testamentary trust. More on trusts in a bit.

Power of Attorney Documents

There are two primary power of attorney documents- a Durable POA for finances and a Medical POA for medical decisions. To learn more about power of attorney documents plus HIPAA releases.

Health Care Directives

Does Terry Shiavo sound familiar? She was the center of a legal battle from 1990 to about 2005 involving her husband and her parents. She was in an irreversible vegetable state, and while her husband eventually won the legal battle and was able to remove the feeding tube, the highly publicized coverage of an inherently private matter could have been avoided. These are sometimes referred to as living wills too. Do your family a favor and define how you want to escape this world if you are unable to make decisions on your own.

Review Beneficiary Forms

Bank and investment accounts plus other things such as life insurance have beneficiary designations. This bypasses the probate process and immediately makes the account payable on death to another entity. Yes, the entity can be a trust or a person, and at times a business entity (uncommon).

Organize Your Stuff

As an eloquent 12-year old will say, Get your poop in a group. This means having a single place for your important documents, insurance policies and real estate deeds. Don’t forget bank accounts, investment accounts, credit cards, loans, etc. Many of these items now come to us exclusively by email- the days of waiting around 30 days for all your important mail to show up for your heirs to deal with are over.

Understand Inheritance Taxes

Federal inheritance taxes were locked in by Congress with the passing of the American Taxpayer Relief Act of 2012. Each person gets $5 million and married couples can protect $10 million through a thing called portability. These numbers are adjusted annually with Cost of Living Adjustments (COLA), and are currently $5.43 and $10.86 million respectively. Great. Inheritance taxes only affect 0.3% of the population. But wait!

If you are doing some Colorado estate planning, no worries. But if you are looking to die in Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont or Washington you might be subjecting your estate to an estate tax. And if you kick the bucket in Iowa, Kentucky, Nebraska, Pennsylvania or Tennessee you might have an inheritance tax.

So, be careful. You might be tax free on the federal level, but have an estate tax and / or inheritance tax issue because of your state. Don’t worry about where you die per se, generally speaking your domicile or state of residency will dictate the taxation. So, just because you live in Idaho and die in Spokane, Washington on a vacation doesn’t mean Washington law will be used.

Ways to Avoid Probate

Back to Wills and Probate. Again, Wills do NOT avoid probate. The four quickest ways to avoid probate is-


You can gift up to $14,000 per year per person for the 2015 tax year. You can gift more, but you eat into your lifetime exclusion which is the federal inheritance tax limit of $5.43 million for the 2015 tax year.

Joint Property Ownership

In you own property with another person as joint tenants with rights of survivorship (JTWROS), when you die the remaining tenant(s) absorb your portion. Having said this, it is a terrible idea for parents to share ownership with their children in an attempt to avoid probate. Bad bad idea. This type of transfer does not receive a step up in basis so when the property is sold, there could be a huge capital gain.

Beneficiary Designations

As mentioned before, bank accounts, investment accounts and life insurance can transfer directly to an entity upon death. This completely bypasses probate.


Revocable Trusts (sometimes referred to as Living Trusts) become irrevocable upon death, and allow the trustee to dispose the assets according to the instructions within the trust.

Limited Liability Companies (LLCs)

Some people also elect to have an LLC own their property, and draft language within the Operating Agreement to assign and vest a Member’s ownership interest to another entity (person, trust or business). This gets exotic since not all states follow this expanding area of probate avoidance. Consulting an estate planning attorney is critical. Need one? Ask us.