Most people think the first step in estate planning is writing a will. It’s not. The first step in estate planning is knowing what you’re working with. And for a lot of people, that’s the part they’ve been avoiding.
The University of Kentucky Cooperative Extension noted that the inventory step is the foundation of any solid estate plan. That’s because the outcome will only be as good as the information that goes into it. Inventorying assets and liabilities is crucial, so let’s discuss what goes on the list.
The First Step in Estate Planning
Take a look at all of your assets and debts, including bank accounts, real estate, retirement savings, personal possessions, and investments. Understand the value and location of each asset and collect the documents associated with them. This can help prevent anything from being overlooked or miscalculated.
Knowing the location of your documents is more important than many people realize. It’s not enough to own something. If your loved ones or estate planning attorney can’t find or access the information, it might as well not even exist.
Completing step one means listing your resources and determining your net worth. It prepares you for each of the next steps in your estate planning with your attorney. Contact Nicole Pavlik Law Firm to get started.
What Is Included in an Estate Plan?
What goes on the list when inventorying assets and liabilities for step number one? First, think beyond basic bank accounts and real estate. A comprehensive assessment of your situation means collecting the following:
- Insurance policies, such as life insurance, long-term care, and annuities (note policy numbers and document locations)
- Financial accounts, such as checking, savings, CDs, and 401(k) or IRAs
- Business interests, such as full or partial partnerships or ownership
- Real estate, such as private homes, rental properties, land, and timeshares
- Digital assets, such as online accounts, cryptocurrency, and digital files or domain names
- Personal property, such as vehicles, jewelry, art, and family heirlooms
Also, list all debts, including mortgages, loans, credit card balances, and any other amounts you owe. Talk to your estate planning attorney for a complete, customized list of the items you need for your plan. Then, determine the best way to store these items for easy access.
Make sure your loved ones, attorney, and the executor of your estate know where to locate the most important documents. For many, keeping estate-planning documents in a fireproof safe is the best approach.
Why the First Step in Estate Planning Matters
If something happened to you tomorrow, could the people who need to access your estate planning documents find them quickly? If the answer is no, then the first step in estate planning is even more important.
Many people jump to making a will before doing anything else because they think it’s the first real part of planning. However, your will is only as useful as the documents that support it. An estate planning attorney can’t help you determine how to structure your plan if they’re missing information, and a judge can’t enforce what isn’t in the plan.
The Process of Estate Planning
The estate planning process involves making arrangements for the management and transfer of your estate during your life and after your death. That means the inventory should contain everything that matters to you, including pets, dependents, and items of sentimental value. While a will can help cover those things, a comprehensive estate plan fills the gaps.
Well-made estate plans also come with a practical benefit many people never anticipate. Once the inventory is complete, the rest of the process moves rather quickly. Your attorney will ask some questions to ensure your plan includes the essentials, and decisions that once felt overwhelming now start to feel more manageable.
Ready to talk about your future and plan for everything? Book a consultation with Nicole Pavlik Law Firm today to learn more.
What to Do Before an Estate Planning Consultation
Know the answers to these questions before speaking to an estate planning attorney:
- Who should make financial decisions for you if you can’t make them for yourself?
- Who should make medical decisions on your behalf if you become incapacitated?
- Who will raise your minor children, if you have any?
- Are there people or organizations you want to leave assets to?
- Is there anything specific you do not want to happen?
Having thought about these questions puts you in a favorable position during the consultation. It means the conversation with your attorney can focus on your wishes rather than figuring out the basics from scratch. Reach out now to begin.