1. Keep your will or trust up to date.
Many state laws invalidate any will made prior to a major life event, such as marriage, divorce, moving to a new state, or the birth or adoption of a child. Keep your legal residence address, marriage status, beneficiaries list, etc. updated.
2. Keep track of beneficiaries for all of your IRAs, qualified plans and insurance policies.
Do you know who your beneficiaries are for these assets? If you don’t, they may be going to someone you no longer wish to receive them. You can easily change the name of the person who will receive their benefits by filling out a form.
3. Maximize the liquidity of your estate.
Liquidity is defined as the ability to quickly turn assets into cash. Without sufficient cash to pay taxes, funeral, and other expenses, your family may have to sell illiquid assets – such as a family business or other property – at an inopportune time. Avoid putting your family in the position of selling off the estate in a hurry by providing for sufficient liquidity.
4. Maintain an Appropriate Mix of Investment Risk.
It’s detrimental to have too much money allocated to risk in stocks or mutual funds, as a percentage of total cash assets and age. Over time, more risky investments should be moved into safe and stable investments such as Annuities.
5. Name a dependable executor and/or trustee.
Executors are called upon to collect assets, pay obligations, and distribute your assets. Your trustee must enforce all the provisions of any trusts you created. Choose people who have the knowledge, integrity and stamina in the face of pressure from family members to fulfill these obligations.
6. Explore the ramifications of joint asset ownership with your spouse.
This ties in with the estate tax issues in item 1: if your joint net worth exceeds $1 million, you might want to consider owning some assets separately as part of your overall estate plan.
7. If you have minor children, consider naming one guardian for your minor children and a separate guardian for the property you’ve left to support them.
The best guardian for your children may not be the most effective money manager you know. Just be aware that the person you’ve chosen as guardian of your children, can be a different person than the guardian that manages your children’s property.
8. Estate planning for your spouse or other sole survivor scenarios.
If your net worth is high enough, your estate may be subject to taxes. A simple estate plan can save some individuals hundreds of thousands of dollars in estate taxes.
9. Leaving the right assets to the right people.
If your child was a “special needs” child, you would not leave him money to handle on his own. Make sure your teenager or other dependents, receive much needed management along with the cash.
10. Plan, Plan, Plan.
The future is in your control. Decisions you make about how you structure your estate will affect your family. Until you’ve taken action, you don’t have an estate plan, but don’t be overwhelmed. Nothing is irreversible, and you can take small steps to put your plan into place. Planning is most important for business owners, who must plan for the succession and/or buy-out of their business.