Steps To Creating a Good Estate Plan

There’s more to it than just writing a will

An estate planning attorney works with a couple.

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Your estate plan is a road map that shows how your assets pass to your loved ones—either during your life (for various reasons, such as Medicaid planning), or after your death. It includes choosing someone you trust to make financial and medical decisions for you if you are unable to do so.

Depending on how much wealth you have, you may also need to plan for taxes that may be owed on your property during your life and after your death. Planning ahead helps ensure your assets are distributed the way you want them to be.

Key Takeaways

  • Make a list of all of your assets and what they’re worth.
  • Name beneficiaries and an executor (or a trustee for a trust).
  • Choose someone to make financial and medical decisions on your behalf if you become unable to in the future.
  • Hiring an attorney can help ensure the process goes smoothly and that you’ve planned for tax issues.

Most adults would benefit from having basic estate planning documents in place. Besides a will and/or trust, you should have health care directives and a durable power of attorney to name a representative or agent to make decisions for you if you become incapacitated. The following steps are a guide to developing an estate plan that will preserve and protect your assets.

Itemize and Calculate the Value of Your Estate

Create an itemized list of your assets and calculate their values. The list should include real estate, bank accounts, retirement policies, annuities, life insurance, investment accounts, and any other accounts or policies you own. Also include any valuables and items you want to give to specific people.

Writing this list is a big task, but it is the jumping-off point for creating your estate plan for several reasons:

  • It forces you to think about all of your assets, so nothing is missed.
  • It can help you decide whom to choose as an heir or beneficiary.
  • It helps you calculate the total value of your estate so that your attorney can address estate tax, asset protection, and Medicaid planning issues.


If you don’t identify all your assets and determine how they will be distributed in the will, it could lead to messy probate proceedings.

Decide Whom Your Beneficiaries Will Be

After you’ve made a list of your assets, decide how you want to pass on your property. You can choose anyone you want, depending on the rules of your state. For instance, some states will not allow you to disinherit your spouse, and Louisiana has forced heirship laws.

For some, choosing beneficiaries may be simple: They want their spouse, children, parents, or siblings. But if you’re considering beneficiaries who are minor children, disabled, or not your next of kin, you should discuss the legal implications with your attorney to ensure that what you are leaving them doesn’t cause unnecessary complications.


Beneficiaries who are on Social Security Disability Insurance (SSDI) when they receive an inheritance should not experience an impact to their benefits. However, an inheritance can affect Supplemental Security Income (SSI) benefits.

Also make sure you have a residuary clause listed in your will so that no matter what, there is a catch-all beneficiary designated for all unlisted assets. If no beneficiary is designated for an asset, then it cannot be passed along under your will, and will instead pass as though you died without a will. That means those items would be distributed to your heirs based on the laws of your state, instead of what you may want.

Beneficiaries on Financial Accounts

Some assets, such as retirement plans and insurance policies, can or must be passed on outside of your will. You’ll typically need to choose a beneficiary for each of those accounts.

You may also be able to name beneficiaries for ordinary accounts, such as a savings account. Ask your bank what options you have. Naming a beneficiary may make the inheritance process easier for your heirs, because they’ll be able to skip the probate process for those items.


Beneficiary” and “heir” do not mean the same thing. An heir is a blood relative or a spouse. A beneficiary is someone you list in your will, trust, or on financial accounts. You may name an heir or someone else (including an organization) as a beneficiary. And depending on your state, an heir may automatically be considered a beneficiary unless you exclude them from your will or trust.

Choose an Executor

After you decide how to divide up your property, pick an executor for your will. They’ll be responsible for the distribution of your assets after you die. If you set up a trust, you’ll need to name a trustee. Your appointed representative should be someone trustworthy, organized, and responsible. They should also be someone who understands and is empathetic to your wishes.

Consider Creating a Trust

You might want to create a living trust instead of a will so that your beneficiaries can avoid probate. A trust can also be helpful if you become incapacitated or if you want to provide certain protections to beneficiaries after your death. There are a variety of scenarios where a trust might be the best choice for you and your family.

Shop Around for Professional Help

You might be able to write your own estate plan, but it’s usually best to hire an attorney to give you individualized attention. An attorney experienced in this field can craft a plan for you that takes into account your assets, family, future long-term care needs, and potential estate or inheritance taxes.

A qualified estate planning lawyer will usually be able to answer any questions you have about setting up your plan and making sure you’re looking out for your heirs’ interests.

Here are some tips for finding a good estate planner:

  • Look for a specialist.
  • Ask friends and family if they have any recommendations.
  • Ask other attorneys for referrals.
  • Check with your state bar association to see if it has a referral service.
  • Look for someone with a certification in estate planning, if your state offers one.
  • Interview a prospective estate planner to find out if they’re a good match.

Consider Estate Taxes

If you’re lucky enough to have a large estate, you’ll need to take estate taxes into consideration. To calculate what, if any, estate tax is likely to be owed, it is important to know that even assets that pass to beneficiaries outside of probate can be included in the total value of your estate when the estate tax is being calculated.

Estate Tax Exemption

Federal estate tax is owed only on estate assets greater than $12.06 million for an individual who dies in 2022, and up to double that for a married couple. Some states also have their own estate taxes. For example, in 2022, New York estate tax is owed only on an estate valued above $6.11 million.

The federal estate tax is tied in with the lifetime exemption for federal gift taxes. If you give a gift over the annual gift tax exclusion of $16,000.00, you will not necessarily be taxed on the gift; you will just need to report the gift to the IRS so that it can be credited toward the lifetime exemption.

Reduce or Avoid Estate Taxes

Even if you have an estate that would normally be taxable, there are ways to avoid certain estate taxes. As mentioned, New York collects estate tax on estates larger than $6.11 million. But New York only has a gift tax on gifts made during the last three years of your life.

If you have assets that add up to more than $6.11 million but less than the federal limit of $12.06 million, you might be able to gift the difference during your life and effectively help your beneficiaries avoid estate taxes.

Set Up Your Medical Care Directives

Everyone hopes to live a long and healthy life, but one of the main purposes of estate planning is to be prepared for the unexpected. If you’re not able to make health care decisions for yourself, it’s important to have an advance care directive, also called a living will so that your family or representative knows what types of medical interventions and treatments you want in certain circumstances.

You should also have a durable power of attorney to name a representative or agent to make financial decisions for you if you become incapacitated. Choose someone reliable and trustworthy.

How a Living Will Can Help You

Having these instructions makes it easier for your appointed agent to make some very difficult decisions on your behalf, and may allow them to do so without feeling the guilt or uncertainty that sometimes comes along with making end-of-life decisions.

In addition, your living will acts as evidence of your wishes in case your health care agent is challenged by anyone, including health care personnel, while trying to carry out your instructions.

Sign Your Documents

Once you have reviewed your assets and worked with a lawyer to write up the documents you need, be ready to sign, or “execute,” your documents. It’s important to work with an attorney while putting together the paperwork you need because they will be familiar with all of the rules you’ll need to follow. If your documents are not executed properly, they might be invalidated, which could result in your wishes not being honored.

Revisit Your Estate Plan

You’re not done after you sign your will and designate beneficiaries. Even after your plan is in place, it’s important to review it periodically to make sure it is up-to-date. Review your plan every five years and after all major life events, such as marriage, divorce, birth of a child, death of a beneficiary or heir, or significant change in financial or health status of either you or any beneficiary or heir.

When reviewing your plan, examine your list of assets and make sure those assets still exist. Check to see if you’re still happy with all your beneficiary designations. And if you’ve made lifetime gifts of any of the assets included in your will, remove them from your will to avoid confusion.

Frequently Asked Questions (FAQs)

How much does an estate plan cost?

The cost of having an attorney prepare your estate plan depends on how much work there is and where you live. However, there may be a legal organization near you that offers less-expensive estate planning services.

Make sure you know what their fees are and if you’re being charged a flat rate or an hourly rate before you begin working with someone.

Why do I need an estate plan?

You need an estate plan to help your beneficiaries avoid probate, reduce estate taxes, and make sure your assets are handled the way you want. To have control over how your assets are distributed, and even how they may be used, you need to have a properly executed estate plan. It also helps ensure that future medical and financial decisions will be made by your chosen representative in accordance with your wishes.

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  1. Nassau County Bar Association. “Testamentary Substitutes and the Right of Election.”

  2. Jeffrey Freedman Attorneys, PLLC. “Will an Inheritance Affect My Social Security Disability Benefits?

  3. IRS. “Estate Tax.”

  4. Warshaw Burstein. “2022 Trust and Estates Updates.”

  5. New York Department of Taxation and Finance. “Estate Tax.”

  6. J.P. Morgan Wealth Management. “New York Estate Planning.”

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