Five essential estate planning questions to ask

Taking time to do your estate plan now can benefit the ones you love later.
We all hope to leave something behind after we’re gone. For some people, that takes the form of leaving an inheritance for family, money for a grandchild’s college education, a legacy for a favorite cause or even some sentimental items for friends. For others, it’s simply trying to minimize the challenges—financial and emotional—facing those loved ones. One of the biggest benefits of having an estate plan is knowing you’ve done what you can to make things easier for them.
Pondering your own incapacity or mortality, and what might happen to your loved ones when you are no longer with them, can be tough to face. It’s what keeps most people from starting the estate planning process, but taking this step now—and regularly reviewing your estate planning documents after you’ve crafted them—can provide confidence for you and your loved ones that your wishes will be carried out.
Here are five estate planning questions to help you get going:
1. Who makes decisions if I can't?
If you become incapacitated and can’t make decisions for yourself, who will make them for you? Who will manage your assets? It’s hard to imagine putting that burden on your loved ones’ shoulders in such a challenging situation, which is why you should spell out your thoughts in a durable power of attorney, a healthcare proxy and a living will. If you don’t have these documents, your loved ones would have to petition the courts for guardianship or conservatorship, and that would be on top of worrying about your health.
Here are the basics:
  • A living will gives you the opportunity to say which medical treatments you would or would not want to receive if you couldn’t make your own choices.
  • A healthcare proxy lets you put someone in charge of making healthcare decisions on your behalf.
  • A general durable power of attorney designates someone to manage your day-to-day financial and legal affairs. This person can be authorized to receive income, write checks, pay expenses, file your income taxes and more.
     
“Before choosing the people in these roles, consider all the things that they would be responsible for,” says Daniel Soo, a senior wealth management advisor with TIAA. “Think carefully about whether they have the time and the expertise to handle them. It also helps to have a trusted advisor, like TIAA, to provide support along the way.”
2. Who gets my savings and possessions?
Think about the things you have to share—whether it’s money you’ve saved, your home or heirlooms you’ve collected. Passing those on to others can have an emotional, as well as a material, effect on their lives. Estate planning provides a way to make sure your possessions are shared the way you intended.
  • Your will is typically the primary component of your estate planning documents, outlining your general wishes, and the executor is the person who carries them out. So it’s important to choose an executor for your estate.
  • Not all assets get transferred through a will. Life insurance and retirement accounts are typically passed through the beneficiary designations on those accounts.
  • Similarly, property that you own jointly typically passes to the surviving owner.
  • If you have transferred assets to a trust during your lifetime—either revocable or irrevocable—those assets will not pass under your will but will pass per the terms of your trust.
     
Keeping all of your estate planning documents updated—including your will, beneficiary designations and titles of large assets—and having a plan to control, manage and protect your assets are important steps to take to make sure that the people you want to receive benefits actually do.
What happens if you pass away without having done any estate planning?
“In that case, the laws of your state will decide who inherits your property,” Soo says. “It will likely go to your next of kin, which could be your spouse, a parent, a child or a sibling. This will be an emotional time for your loved ones. There could be differences of opinion unless you’ve made your wishes clear. Talk to your loved ones about the choices you’re making so they will understand the reasons behind them.”
Who gets my assets?

How will your estate pass?

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By trust 

You can add many types of assets into a trust, which is not subject to probate.
Beneficiary

By beneficiary designation

Assets that include a beneficiary, like life insurance or retirement accounts, pass to those people named.
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By joint survivorship

Assets you own jointly, like a home where you and your spouse are on the title, typically pass automatically to the surviving owner.
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By will

Assets that aren't covered by other means typically pass through your will, which is subject to probate.
3. What’s the best way to leave instructions about who gets what?
Dividing up family heirlooms can strain even the most harmonious families. To try to avoid any future conflict, it’s a good idea to spell out your wishes. When writing a will, we tend to focus on financial assets. It’s easy to forget about the jewelry, furniture and other personal belongings that may also make up your estate. Try creating a list of all of your non-titled property, saying in clear terms where you want each of your assets to go.
4. Do I really need a trust or insurance?
If you have a complex financial situation or are leaving assets of multiple types, there are options beyond a will that may help you minimize your estate planning expenses.
Trusts
You may want to consider using a trust as part of your estate plan. Trusts can control the manner in which assets pass to your heirs. A trust can also be used to help your loved ones avoid probate, which can often be a costly and time-consuming process. There are several different types of trusts, one of the most common being a revocable living trust. Having a trust can also help minimize estate taxes that your loved ones could face. A financial advisor, working in conjunction with your estate planning attorney, can help you decide whether, or how, a trust could be used to help carry out your specific estate planning wishes.
5. Who should I name as my trustee?
To create and implement a trust effectively, you need to name a trustee you can count on to carry out your intentions. Your trustee should be responsible, reliable and also have the required experience and expertise. They should also be able to communicate with beneficiaries. You may choose a trusted family member or friend to serve in that role if you think they are qualified and have the time to do it.
Or, you may want to consider a corporate trustee if your other candidates could wind up feeling overwhelmed by the responsibilities, don’t have sufficient resources to meet all of the trustee’s duties or simply would appreciate having some professional help.
It’s a lot to consider, but you don’t have to go through the estate planning process alone. A financial advisor, working with an estate planning attorney, can be trusted resources to help make sure you have the proper team in place to execute your wishes. That way, you can feel confident that those wishes will be fulfilled and that you’ll be making life a little easier for your loved ones.
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The TIAA group of companies does not provide legal or tax advice. Please consult your legal or tax advisor.
This material is for informational or educational purposes only and does not constitute investment advice under ERISA. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action.
Investment decisions should be made based on the investor’s own objectives and circumstances. Advisory services provided by Advice & Planning Services, a division of TIAA-CREF Individual & Institutional Services, LLC, a registered investment adviser.
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