Estate planning guide: Essential documents & checklist

What do you want to leave behind when you pass away? You want to know your loved ones are taken care of, and that all you've accumulated throughout your life will end up in the right hands. To truly pass on generational wealth, along with your wisdom and values, you'll want an estate plan that lays it all out.

Estate planning documents are the cornerstone of your plan. Read on to learn the most important documents to get in order and how you best can prepare your family.

Without a legal record of your final wishes, your assets will be distributed according to state law—taking provision for your family out of your hands and into probate court. Probate court can be a lengthy and costly process that could delay your loved ones getting what they need.

And although probate is sometimes unavoidable, staying on top of your documents can help it run as smoothly and quickly as possible.

You have several forms to consider when deciding which documents you need for estate planning. The most important ones outline who gets your assets and who has the authority to make decisions when you can't. These four estate planning documents are essential as you think through your plans:

• Will
• Durable power of attorney
• Health care power of attorney
• Advanced care directive

A will names who will manage your estate and distribute your property when you die. With a will, you can designate who will receive your assets—including an institution or charity—and how and when they'll receive them. You also can direct who will receive your property if you and your spouse pass away at the same time. If you have dependents, you'll designate a guardian for them.

As part of your will, you can name your personal representative to serve without bond, saving your estate money. You also can identify how estate settlement costs would be covered.

A durable power of attorney allows you to name someone who will make financial, legal and tax decisions on your behalf if you're unable to make them yourself. Without a durable power of attorney, no one can represent you unless a court appoints a conservatorship or a guardian.

This process can take time and cost money, and the judge may not choose the person you prefer. When you create a power of attorney, you can appoint someone you trust and specify what they can or can't do on your behalf.

This document is like a durable power of attorney for health care. The person you name in this document can make medical-related decisions on your behalf if you can't make them yourself. From electing your treatments and procedures to selecting your providers, your named representative prioritizes your desires and best interests. That's why you'll want to choose a trusted person who knows your wishes.

An advanced care directive, also known as a living will, states your medical treatment preferences. All adults have the right to informed consent in their health care. However, there may be situations when you can't make your own care decisions. A living will tells your family and health care professionals how far you want your treatment to go should you become seriously ill.

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In addition to the essential estate plan documents that outline your wishes and directives, you can add other documents to your plan so everything is in order and easy to find. Here are additional documents for estate planning to consider:

• Trust. A trust is a separate entity that holds your assets for your beneficiaries until an appointed time. Assets within a trust may not be included in your estate (depending on the type of trust) which could result in significant estate tax savings for your loved ones.
  
• Life insurance contracts. Your life insurance contract pays out a benefit upon your death to any beneficiaries listed on the contract.
  
• Retirement savings accounts. Retirement savings accounts like a 401(k) or IRA should include beneficiaries for when you pass away.
  
• Titles and deeds. Gathering titles and deeds for all your property means your family easily can find these documents when they need them.
  
• Business documents. If you're a business owner, you may want to have key documents on hand such as a succession plan or buy-sell agreement.
  
• Liabilities. You may have some debts that must be paid even after your death. You can list these in a document that makes it easy for an executor to handle.
  
• Letter of intent. A letter of intent can detail personal and private instructions you'd like to leave your loved ones regarding your assets, philosophy and values.

You can store many of these documents digitally so your loved ones can access them easily. Keep original, legal copies of your will—along with your titles and deeds—in a folder in a safe and secure location.

Understanding which essential documents you need for your estate plan is a critical first step. Your next step is to have the important conversations with your loved ones so your inner circle understands your wishes and are on board. Once you're confident in your plan, you can take steps to put it in place.

First, take inventory of the assets in your estate and outline how you want to distribute them. You can work with an estate attorney to draft your legal documents. Consider this estate planning checklist as you go through this critical process:

• Make a list of all assets and liabilities to know what will need to be distributed and paid when you die.

• List family members who will receive certain assets or take guardianship of dependents or pets.

• Work with an estate attorney to fill out your estate planning forms, including your will, power of attorney and advance care directive, along with any other documents you choose.

• Designate beneficiaries, if you haven't already, on your life insurance contracts, retirement savings accounts and bank accounts. While this isn't technically a key document, it's an essential action to take when setting up your estate plan.

• Understand the tax implications of your estate plan by working with a financial advisor and tax professional who can help you create a tax-efficient plan.

No, having an estate plan isn't just for wealthy families. Anyone with assets will want an estate plan to clearly lay out how those assets should be distributed and who can make decisions on your behalf. Regardless of the amount of wealth, you can do the most with what you have by making sure your assets are handled appropriately once you're gone.

If you pass away without beneficiaries listed on your estate, your wealth will be distributed according to state law. The probate court decides who gets what within your estate, and this process could take months or longer, depending on the complexity of your family or assets. Having an estate plan with designated beneficiaries can give your loved ones what they need as quickly as possible.

Understanding estate planning on your own can be cumbersome. It's a good idea to work with an estate attorney to create your estate plan. Your attorney can help you consider all situations, given your estate, and think through the hard questions. Estate attorneys also are aware of state laws and other details so they can confirm your plan is compliant.

Depending on the size of the estate, your assets may be subject to federal and state estate taxes due once you pass away. These taxes can eat into the value of your estate, placing an undue burden on your family. A financial advisor, along with your tax professional, can help with your financial and estate planning. While Thrivent does not provide specific legal or tax advice, they can partner with you and your tax professional or attorney. Together, they can help you create a tax-efficient estate plan and big-picture financial strategy that aligns with your goals and values.

Imagine continuing your legacy of caring and providing for your family, even after you're gone. Getting your estate plan and essential estate planning documents in order today can give you a sense of reassurance about the future.

But remember, an estate plan isn't a "set it and forget" process. It can evolve with key life events. Review it regularly with your estate attorney, tax professional and financial advisor to keep it in line with your goals and values.