Estate Planning: 12 Step Guide On Everything You Need To Know

Estate Planning may not be an enjoyable task, but it certainly is important. This 12 step plan will guide you through the process.
estate planning 12 steps

Let’s be honest: estate planning isn’t the most enjoyable task. It forces you to think about your own mortality, which can be difficult, to say the least.

But it’s also a very important task, for a number of reasons.

In this guide, we’ll walk you through everything you need to know about estate planning, including what it is and how to do it, step-by-step.

What Is Estate Planning?

Estate planning is the process of drafting a legal document outlining all of an individuals’ wishes for his or her assets, possessions, and properties after death. It can be used to guide decisions regarding how money and property should be distributed to heirs after death, as well as guide medical directives in case one becomes incapacitated. A will is usually the most common form of estate planning, and is a vital part of how individuals distribute their possessions after death.

Estate planning also refers to drafting documents to guide health decisions toward the end of life. Documents like living wills to guide medical professionals as they care for incapacitated patients without input from the patient themselves (usually only in cases where the patient has been deemed medically incapable and not mentally fit to make decisions). It also outlines how the patient would like his/her body treated after death, as well as which hospitals or funeral homes should be used.

Reasons For Estate Planning

Now let’s look at some specific reasons that a person might begin doing estate planning.

The Arrival of Children

estate planning is critical once you have kids

When people begin having children, they often want to make sure that their children will have sufficient funds if the parents unexpectedly passed away. They may also have specific ideas regarding who would act as guardian for the children.

Additionally, a person with specific goals for a child’s education may want to leave money for that purpose, or they may want to establish a general trust fund that their children gain access to when they reach a certain age.

Probate and Privacy Concerns

After death, an individual’s assets will be placed into probate. Probate is a legal procedure that determines which individuals should inherit the deceased’s possessions after he or she passes away. Effective estate planning makes it very clear what assets are available and who should receive what, thus avoiding long, drawn-out family battles. Given the importance of this, and the arguments that can arise, hiring a probate attorney is a popular decision. This article will lead you through the process of hiring a probate lawyer.

Another reason to draft estate plans is to ensure that sensitive information will not be revealed on death. Instructions can be left about how to handle private documents, how to access particular assets, etc. It allows the individual to, in a sense, control the narrative after they pass away.

Business Succession

If an individual owns a business, that person will obviously want to ensure that the succession of his/her particular business is handled properly. Certain people should be designated as successors in case something were to happen to the primary owner.

Business owners may also want to outline how the business should operate and who should be in charge of making decisions. Additionally, they may have specific instructions about their wishes for employees or other people involved with the business.

Philanthropic Goals

philanthropic goals are important for estate planning

Many people use estate planning in order to ensure that their philanthropic goals are carried out after death. This includes things like financial donations to existing institutions, the creation of a non-profit , or other actions designed to help a particular cause.

It may also refer to the legacy they leave behind such as naming a certain university endowment or building in honor of themselves. They may want to leave money to charities and non-profit organizations, or provide scholarships to students.

Life Stage

One of the primary reasons people begin estate planning is because of transitioning into a new life stage. For example, when people get married, or have children, they may feel the need to ensure that others will be able to handle their responsibilities and take care of their family if something were to happen to them. As such, estate planning can represent a significant step toward adulthood.

Additionally, individuals may feel that it is time to begin preparing for their own deaths, especially if they are getting older. As people age, the risk of death increases and so it can help to have things in order just in case something were to happen unexpectedly.

Preparation for Becoming Incapacitated

A person may worry that circumstances will happen where he or she won’t be capable of making decisions (like after a car accident), and so being prepared can help to alleviate some of this anxiety. Furthermore, if the person has a serious chronic or terminal illness (such as ALS) that is likely to worsen over time, it may be beneficial to have financial and legal arrangements in place prior to onset.

Special Circumstances

Blended families and the special needs of some family members are unique circumstances that may have an impact on decisions relating to estate planning.

In the case of blended families, estate planning can be more complicated. When people who were previously married get remarried, they may want to leave specific instructions about what should happen with property or possessions from their previous spouses. Or, there may be instructions about what step-children receive and what biological children receive from each parent.

Additionally, special needs children require certain legal considerations because of the additional care that is often required. For example, disabled children may need someone to step in and make decisions on their behalf once the parents are gone. This person is often called a guardian or conservator and can be appointed by the court.

Estate Planning Step-By-Step

12 steps for estate planning

Now that we’ve gone over some of the primary reasons you might want to consider estate planning, let’s walk through each step of the process.

1. Create a Will

The first step in estate planning is creating a will. Even if you don’t have large sums of money to pass on, a will is still a good idea because it can provide clarity surrounding your wishes regarding what happens to your property. This includes the division of assets and possessions after death. You can also include instructions about how you want your funeral or memorial service carried out, as well as provide instructions regarding how you want your body to be handled (buried, cremated, etc.).

You may already have a will in place from an earlier life stage (like when you got married or had children), and this document is valid. In that case, you can simply update your will to reflect changes in your situation (for example, if you buy a new home or have another child).

2. Consider Creating a Trust

Next, if you have substantial assets (such as real estate properties, life insurance policies, stock holdings, and/or large bank accounts), it may be beneficial to create a trust. The primary reason people choose to create trusts is because they want to protect the integrity of their money for future generations or family members. One way you can use a trust is by giving a trustee broad powers to make gifts on your behalf.

So, for example, suppose you want to ensure that your granddaughter has plenty of money in her trust when she eventually marries. You can give the trustee of the trust power over how much money is given out and when it’s given out.

3. Establish Instructions for Your Health Care

Setting up instructions for your health care can be an important part of that estate planning process. This ensures that your wishes are followed in the event of incapacity, which is when you don’t have the mental capacity to make decisions for yourself.

You may want to consider getting a durable power of attorney for health care (also known as the Durable Power of Attorney for Health Care, or “DPA,”) which is basically an extension of your will. This way you can specify who has access to and control over your medical records, insurance policies, property, etc., in the event that something happens. Also, this DPA informs your doctor of how you want to be cared for in the event that you are unable or incapacitated. If you need a hand with the paperwork, we’ve written an article that walks through the Form 2848 instructions, which establishes Power of Attorney with the IRS.

The next thing you may want to consider is a living will (also known as an Advance Directive). This can help communicate your wishes about receiving medical care if there is a terminal illness, and it’s important because it explains what types of treatments you want to receive or not receive. You should work with your doctor and/or estate planning attorney to create these directives.

4. Establish a Power of Attorney

establishing power of attorney is part of the estate plan

Another estate planning step that you should consider taking is establishing a power of attorney (different from a DPA). A power of attorney is a document which authorizes someone else to act on your behalf in legal and business matters.

For example, if you’re in the hospital and are incapacitated, your power of attorney can continue to pay your bills or otherwise manage your financial affairs on a day-to-day basis.

5. Protect Your Children’s Property

One of the most important steps in estate planning involves thinking about and securing your children’s financial future by leaving them a substantial inheritance, as well as someone to manage the funds if the children are minors.

Not only do you decide what your children will receive in their inheritance, you also decide when they receive specific amounts, and whether any of that inheritance is to be used for a specific cause, such as college.

6. Name Beneficiaries and File Necessary Forms

As we’ve noted, a central part of estate planning is naming beneficiaries for the assets in your will. To allow the beneficiaries to access these assets without having to go to probate court, you will need to have a beneficiary designation form on file with the financial institution of every account that names someone as the beneficiary.

One thing to remember is that your desired beneficiaries may change over time. So, it’s important to review beneficiary designations regularly and ensure that all the proper forms have been filed at the relevant financial institutions.

8. Know How Estate Taxes Work

Estate taxes are assessed when a person dies, and the tax is paid by the estate. The taxes are determined based on the value of the estate, and if yours exceeds a certain threshold, then taxes must be paid.

Effective estate planning includes knowing how estate taxes work and how to avoid them or limit them. Working specifically with a tax lawyer or knowledgable estate planner can help you minimize the amount of taxes your estate ends up paying, which leaves more assets for your beneficiaries.

9. Arrange for Funeral Expenses

consider planning for a funeral as part of your estate planning

Unfortunately, funerals are not cheap. Depending on your plans, you may need to consider the costs of the:

  • Coffin/urn
  • Burial plot
  • Funeral home
  • Officiant (priest, pastor, etc.)
  • Flowers

If you don’t have life insurance, or if your family doesn’t have enough resources to cover the costs of a funeral, then it’s important to plan ahead and make arrangements now.

That way, your family can be assured that their loved one will be given a respectful burial, regardless of your family’s financial situation.

An effective way to arrange for your funeral is to work with an independent funeral home and establish a pre-paid account that can be drawn from when the time comes. An advance payment plan makes it easier for you and your family because they won’t have to worry about coming up with the money at a difficult time.

10. Document End of Life Wishes

When you’re estate planning, it’s important to think about and/or document end of life wishes. You don’t want to leave loved ones guessing at your final requests. Documenting these wishes is an effective way for them to know how you would like your death handled.

For example, you may state whether or not you wish be resuscitated, whether or not you wish to be put on life support, and so on. Documenting these wishes allows your family the option of following your directions rather than making difficult decisions for you.

11. Establish a Business Succession Plan

Creating a business succession plan is another important part of estate planning. Establishing a business succession plan involves deciding how you would like for your company to be transferred to new ownership, or what will happen if the company is unable to continue operating.

Establishing a business succession plan may mean:

  • Determining what type of successor you would like, such as by sale or through the transfer of ownership to someone in your family
  • Establishing buyout and buy-sell rights for critical employees
  • Establishing a trust account to ensure that employees’ retirement benefits are kept intact throughout the transition
  • Creating a buy-sell agreement to ensure that the business can continue operation if there is no clear successor

If you don’t create a business succession plan, chaos could erupt after your death as different parties fight for power within the business. A clear plan keep this from happening.

12. Store Your Documents

store your documents when planning your estate

Storing your estate planning documents is a critical component of the entire process. Store multiple copies of the documents at separate locations, such as a safe deposit box, secure electronic storage, with your lawyer, or with family members. Having multiple copies ensures that nothing is tampered with.

Make sure that relevant individuals know where the documents are stored, as well as how to access them when the time comes.

Store the following documents:

  • Your Last Will and Testament
  • Power of Attorney for Finances
  • Durable Power of Attorney For Health
  • Probate Identification List (list of all assets in your name)
  • List of funeral arrangements
  • Financial Planning documents, such as beneficiary forms, life insurance policies, retirement plan accounts, and so on.
  • End of life wishes
  • Business succession plans
  • And any other important items


Estate planning can be a complicated process, but it’s also an important one that provides peace of mind for those close to you.

At the time of your passing, your loved ones will be dealing with sadness and grief, and estate planning is a way of minimizing the amount of work that they must do in their time of loss. It also protects your finances, minimizes legal headaches, and allows you to be confident that your assets will be distributed properly to your loved ones.

Have another question? Ask an expert.

Our team is here for you. If you have a question about caring for an older adult or other member of your family—be it physical, legal, medical, financial, or anything in between—we’ll have one of our Trusted Advisors get back to you ASAP.

One thought on “Estate Planning: 12 Step Guide On Everything You Need To Know

  1. I’m an only child with step family. I live with my mom for 3 years now she is 83 a current widow. He left no will or estate everything has been left to her including the property but while she pays the mortgage payments she has been refused assuming the loan. Their names are still in her former husband and wife both deceased. What can be done ? So she can own and leave to me?

    She’s in the process of getting the rural development grant of 7,500 or possibly a 20,000 loan for repairs along with the weatherization grant the home was built in the 70s so it needs to be repaired or replaced and up to code so my question is should she get the loan without owning it ? I think not but if she does and she passes is that loan and other loans and credit accounts no longer due?

    Then I think yes but how do I find out about after death who owes her debt? and I do sign all documents will I owe them ?

    So many questions I do not understand and I’m trying to get all done with her just in case when it’s her time she can be at peace.

    With these last 2 years of lockdown without much family visits it’s hard on her and them the not knowing or when she can see them more.

    She wants to leave her car and everything to me and distribute her belongings only sentimentals to her family that she is making a list for me to follow her wishes.

    She has little life insurance she’s in extreme debt that she has been defrauded out of multiple scams that I’m needing help to get back her money that caused the debts and personal loans that now she can’t pay I don’t think they can garnish anything but will I be left to pay off all her debt? Any suggestions?

    I’m trying to get paid by caring for her and were looking into the spend down Medicaid? Here in Kansas? Any help is appreciated thank you.

    I’m learning so much on here but I’m still overwhelmed of the many legal documents and preparations. Does she need to fill these out if I’m living here?
    Our family already agrees to her decisions does she need to have every document listed completed before she goes? If not which ones?

    Thank you and God’s many Blessings that you’ve chosen to offer these free resources to assist us caregiver’s and family’s the tools and answers.

    Following all of my mom’s wishes, are being prepared, planned by her and completed with her blessings for our family. Is Giving her Peace of mind without worry knowing that she is assured when goes to be with Jesus.

Leave a Reply

Your email address will not be published. Required fields are marked *