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Estate Planning Checklist: 8 Steps to Get Your Affairs in Order

Estate planning may appear to be a challenging task. However, having a comprehensive estate plan in place is one of the best ways to protect your loved ones and distribute your assets according to your wishes when you’re gone.

With a solid estate plan, you can minimize estate taxes, avoid the probate process, and make sure your estate planning documents and affairs are in order. This estate planning checklist will help you understand the key steps and documents to consider as you plan for the future in Alabama.

Estate Planning Checklist

1.    Take Inventory of Your Assets and Property

The first step in creating your estate plan is to make a thorough list of all your assets—both physical assets and intangible assets like digital property, intellectual property, retirement accounts, and more.

Be sure to include details like:

  • Your home, vehicles, valuables, and any real property you own
  • Bank and investment accounts
  • Life insurance policies
  • Retirement accounts
  • Business interests
  • Personal possessions like clothing, jewelry, art, etc.

Having a complete inventory ensures you don’t forget to account for any assets that should be distributed as part of your estate or inheritance.

2.    Make a Last Will and Testament

A last will and testament is the cornerstone document in most estate plans. This legal document designates who will receive your assets and property after you pass away.

It also allows you to name an executor to oversee the distribution of your estate, as well as a guardian for any minor children you may have.

In Alabama, your will must be signed by you and two adult witnesses. It should be notarized as well. Be sure to store your signed original will in a safe but accessible place and give copies to your executor and beneficiaries.

3.    Consider a Living Trust

In addition to a will, you may want to consider creating a living trust as part of your Alabama estate plan.

A trust is a legal entity that holds assets on behalf of beneficiaries. There are some key benefits to using a living trust:

  • It allows you to avoid probate, keeping your estate private.
  • It enables you to name a trustee to manage assets on behalf of beneficiaries.
  • It offers protection in case you become incapacitated.
  • It provides control over how and when beneficiaries inherit assets.

Trusts involve more upfront work and maintenance, so consult an estate planning attorney to see if adding a trust to your estate plan makes sense.

4.    Designate Power of Attorney

No one likes to think about becoming incapacitated or unable to make decisions. But, having a designated power of attorney is critical for these situations.

A power of attorney names someone you trust to manage your financial affairs and make legal decisions on your behalf if needed.

There are a few types of POAs to consider:

  • A durable financial POA takes effect immediately and remains in place if you become incapacitated. This allows your agent to manage finances right away.
  • A springing POA only takes effect if you become incapacitated. This limits your agent’s powers unless truly needed.
  • A healthcare POA specifically covers medical decisions when you are unable to make them yourself. Outline any preferences for care.

Choose your agents carefully—they should be trustworthy and financially responsible. You can always revoke a POA if needed.

5.    Add Healthcare Directives

Along with a healthcare POA, also consider including healthcare directives like a living will. This document outlines your wishes for end-of-life medical care—especially important if you become unable to make decisions or express preferences.

A living will provides instructions about:

  • Life support measures you want or don’t want used
  • Feeding tubes and hydration preferences
  • Organ donation intentions
  • Palliative and hospice care desires

Share copies of your healthcare directives with doctors and loved ones so they understand your preferences.

6.    Understand Alabama Estate Tax Laws

Alabama does not have a state estate or inheritance tax. However, your estate may still need to pay federal estate taxes.

In 2023, estates over $12.92 million will owe federal estate taxes of 18-40% on the amount over that threshold. Very few Alabamians will be affected, but it’s important to review federal law changes annually.

If your estate may incur federal taxes, meet with an estate attorney about options like bypass trusts to minimize taxes owed.

7.    Organize Information for Your Executor

Once you have your core estate plan documents in place and assemble a detailed letter of instruction to guide your executor in carrying out your wishes. Include:

  • A list of accounts and online logins/passwords
  • Contact info for advisors like your attorney, accountant, etc.
  • Location of important documents, keys, safe deposit boxes, etc.
  • Final wishes for burial, cremation, ceremonies, etc.

This extra guidance can help avoid confusion or disputes among heirs and ensure a smooth process.

8.    Review and Update Your Plan

Estate plans need regular review and updating, especially when major life events occur. At least once a year, re-examine your documents and confirm:

  • Executors, trustees, and agents are still appropriate
  • Guardian preferences for minor children are still optimal
  • Asset distribution still aligns with your wishes
  • Estate laws or tax limits haven’t changed

Be sure to update documents accordingly and inform your loved ones about any substantive changes made.

Get Help Creating Your Alabama Estate Plan

Planning your estate and getting your affairs in order can feel overwhelming. But an estate planning attorney can help guide you every step of the way.

The attorneys at The Law Offices of Brenton C. McWilliams in Baldwin County have extensive experience helping families thoughtfully plan their estates from start to finish. Contact their team today to review your situation and get personalized advice for creating a tailored, comprehensive estate plan that truly meets your needs.