1.        Will: In this document, you will specify where you want your assets to go when you die. You can also designate who you want to take care of your children and/or pets. If you don’t have a will, the laws in your state will direct where your assets, kids, and pets go. Your estate will go through the legal probate process to distribute your property, kids, and pets whether you have a will or not (only a trust allows you to avoid probate), but if you have a will you get to make those decisions yourself. Bonus.

2.        Legal and Healthcare Powers of Attorney: In these documents, you designate people to make decisions for you if you become incapacitated. As the names imply, a Legal Power of Attorney would make your legal and financial decisions, and a Healthcare Power of Attorney would make health-related decisions. You can choose different people for these roles, or it can be the same person. If you don’t have these documents in place, your closest living relative will most likely have the legal right to make these decisions, and that might not be what you want.

3.        Living Will/Healthcare Directive: In this document, you get to tell everyone what level of medical care you want in case you’re not capable of telling them yourself. For example, you might say you want every possible measure taken to resuscitate you if you have an accident, or you might specify that you don’t want life-sustaining treatment if you are diagnosed with an incurable disease. Again, your closest living relative will probably get to/have to make these decisions if you can’t, so it’s best to document what you want in advance.

1.        Trust: A trust is a contract which designates a third party (the trustee) to hold property for you (the grantor). Trusts can be used to avoid the probate process, minimize estate taxes, and allow more flexibility about how and when your assets get distributed to your beneficiaries. A trust can hold as many or as few of your assets as you like, and there are nearly endless flavors of trusts to meet a variety of needs.

        A note about avoiding probate: Probate is a public process, so you may want a trust if you want to keep the details of your estate and its distribution private. A trust may also make the distribution process move more quickly, since you don’t have the legal machinery of probate. Each state’s probate process is a bit different; some states are fast and easy, and others…aren’t.

2.        Letter of Instruction: This document isn’t legally binding, but you can write a letter to list specific items you want certain people to have, distribution instructions for the executor of your will, and where to find all of your important online and offline documents and assets. If you have preferences regarding your funeral or other memorial service, you can explain those here. You might also include personal messages, like those old mystery movies with a gramophone playing a recording of the dead person’s voice.

1.        Keeping your plan a secret: If it’s feasible, I recommend you talk to your friends and family to set expectations around your estate plan. If you’re designating people to be executors, guardians, and/or trustees, it’s important they know about it and agree to take on those roles. It’s also helpful to let people know where they stand to avoid disagreements and disappointment later on. I get that you don’t want to create drama, but the more you share now the better.

2.        Not keeping your plan updated: Life changes all the time, and events like marriage, divorce, death, and the birth of a kid can affect your estate plan. But even if you don’t experience any of these changes for a very long time, you’ll want to review your estate plan every three to five years. If you don’t keep things updated, you could end up unintentionally disinheriting someone or leaving assets to someone you don’t want to leave them to.  

3.        Not designating beneficiaries properly: First, realize that the beneficiary designations you make will trump anything you say in your will. If you designated your first wife as the beneficiary of your life insurance policy 38 years ago, then remarried and had kids and changed your will to benefit them, your ex will still get the proceeds from your policy when you die. That’s why it’s so important to keep an updated list of all your assets, so you don’t miss old accounts or policies when you update your beneficiaries.

        Next, be sure to designate contingent beneficiaries in case your beneficiary happens to die before you do. If you keep your plan updated this shouldn’t be a problem, but in case you don’t get to this right away you have a backup.

4.        Not funding your trust properly: If you decide to create a trust as part of your plan, you will need to transfer title of the relevant assets into that trust. For example, you might place your home in a trust to reduce the estate tax burden on your beneficiaries. If you don’t properly title the home into the trust, all of the time and expense of setting it up will be for naught. The home will be distributed to your beneficiaries according to the instructions in your will and that will be the end of it.  

5.        Not hiring a professional: If you can manage it within your budget, I recommend you work with an estate planning attorney to prepare all your documents and make sure they are properly signed and witnessed. The attorney will also make sure you properly set up a trust, as relevant, and properly transfer your assets into it. There’s a reason this is a profession, and the more complex your estate and family situation, the higher the odds that a mistake will be made or something will be missed.

6.        Just not doing it: This one hurts me deep down in my soul. As I’ve often said, this was the last thing most of my financial life planning clients ever did. It’s not fun thinking about our own mortality, and in this culture, it’s pretty much taboo. But I beg you to please get this done as soon as you can, so all your hard work and planning benefit the people you care about the most. And when you do it properly, it just might help cut down on the drama and disagreements that arise when someone as beloved as you dies.