How to Create Your Estate Plan

Updated: Nov 13

You have more assets than you think! Follow these tips to create a plan for who gets your house, jewelry, dog, and more after you pass. 




Disclaimer: The information provided is not intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. We encourage you to seek specific advice from your personal tax or legal counsel.



When you hear “estate planning,” you may think of your parents, or even your grandparents. But, anyone who has assets—like a car, a house or condo, jewelry, even a furry friend(!)—or independents—like a child or an elderly parent living with them—must plan for who will get these assets and care for these independents after they pass. 


It’s easy to think that, if you’re young, you have plenty of time to get your estate plan in order. And, hopefully, you do! But, to be on the safe side, we recommend you get your estate lined up. After all, what could it hurt? 


Did you know that, if you don’t have an estate plan, your assets go to your next of kin (like your parents, children, or family members) and the state gets to determine the specifics!? That means that your precious heirloom jewelry from your great grandmother or the collectors’ baseball mitt you spent a small fortune on wouldn’t go directly to your best friend, sibling or cousin. Nope. The state gets to decide. And your furry friend? He’d go to a shelter. Not to mention your children, if you have them, would be left to the courts to determine who would care for them. 


Not to worry! Now that you know why it’s important to have an estate plan at any age, old or young, we’ll walk you through each item to consider in your estate plan, and which next steps to take to get your estate plan in order. 




First thing’s first. What’s an estate, anyway?


  • General property: Everything in and around your home, including furniture, jewelry, car, electronics, fancy guitar, art, china—everything! 

  • Retirement accounts: Consider all of the money sitting in your retirement accounts, including your 401(k), 403(b), ROTH IRA, or Traditional IRA.

  • Life insurance policies: This could be the one from your employer or one that you purchased yourself. They both count toward your estate. 

  • Pets: It might be strange to think of it this way, but, yes, your sweet fur baby is part of your “estate.” Planning for your little furball (or turtle, goat, snake—whoever you took in as your bestie) means naming a caretaker—or perhaps a handful of optional caretakers—and leaving money aside for their care. If you don’t have a plan for your pets, the state could very well turn them over to a shelter.

  • Children: While they’re not “assets” like your car or your computer, your children are considered part of your estate as your dependents. And, it is your responsibility to name a guardian for your children if anything were to happen to you. This means that there wouldn’t be an argument in court over who would get to care for them, nor would there be any chance that they’d wind up in foster care. Definitely consider preparing a will for your children, too, to dedicate money to them when both parents are gone. 

  • Digital Footprint: Have a secure place where you store your accounts and passwords for all of your online accounts—whether that’s your Amazon account or your Facebook account. That way, whoever takes over your assets will be able to properly wrangle, manage and close down your digital assets. 



Why do you need an estate plan? 


There are many reasons to have an estate plan. The top of the list is that, unless you specifically say so within your will or estate plan, the state gets to decide who gets your assets, accounts, pets, and children. In fact, most states automatically give your estate to your parents, if they’re still living. That means, your significant other, best friend, sibling, etc. has no say! If your parents are no longer around, these assets go to the court. 


If you have a significant other or partner but don’t plan to marry, you especially need a plan! Typically, when you pass away, your assets go directly to your spouse. But, if you haven’t made, or never planned to make your relationship offish (according to the courts, at least), your significant other or partner does not have a say in your estate. Of course, that disregards assets that you co-own, such as a cosigned mortgage or car title. 


Don’t forget, even if you’re single, Fido still needs a plan! We don’t want him to go to the shelter. 




Your plan of action 


It’s time to get your estate plan in place! Don’t worry. You can take this process in chunks. It doesn’t have to happen all at once. (But, as we just shared, it’s still incredibly important to get done!) 


Below are the next steps you need to take to create your estate plan. 


Financial Decisions 

  • Durable POA: assigns a person who can make financial decisions on your behalf if you are uncapactiated and cannot do so for yourself 


Healthcare

If you’re ever in a position where you can’t make medical decisions for yourself (e.g., perhaps you’re in a coma), you’ll want to have the following three documents in place so you’re well cared for by someone you trust. 

  • Living Will: explicitly states how you want your healthcare and end-of-life care to be if you’re unable to communicate it for yourself. This includes whether or not you’d want to be resuscitated, and if you’d want to be kept alive by machines. (Yes, this is incredibly dark, but important to have in writing; having the conversation with a loved one is good, but not enough to hold up in court.) 

  • Healthcare Proxy: determines who can make medical decisions on your behalf if you are uncapactiated and cannot do so for yourself. Heads up: we recommend you talk to this person ahead of time! This isn’t the type of thing you want to spring on someone. You’ll want to have a tough conversation and make sure that they would be able to make difficult decisions on your behalf—despite the pain, sadness and fear that could accompany the situation. 


Last Will and Testament 

This document designates who will get your estate after you pass. This includes your home, car, electronics, pets and children. 


Beneficiaries 

A will and testament might be too pricey—or too much of a headache—for you right now. And that’s okay! If that’s the case, we highly recommend you set a list of beneficiaries up for your accounts. This includes your bank account, life insurance account, and your retirement accounts like your 401(k), 403(b), Roth or Traditional IRA. 


We're here for you


Your estate plan is something that will require lots of thought and consideration. While it’s incredibly important to complete—and, sooner rather than later—it’s something that requires careful planning. This isn’t the kind of thing you can quickly do in between Netflix episodes. While you can certainly do it in small pieces—and we recommend you do it that way, so as to not get overwhelmed—we encourage you to consider your options, sleep on your decisions, and discuss them with your loved ones. 


Much like most of these documents and decisions, your estate plan can be a morbid concept to consider. But, keep in mind that these decisions are crucial to ensuring your end-of-life care and decisions therein are how you’d want them to be.


With that, take a breath. And log onto Pocketnest to get your estate plan rocking (as well as the rest of your financial plan). We’re here to help you along the way. 


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