Contemplating end-of-life decisions can be difficult enough without considering the complexities of estate planning.

It’s no wonder, then, that almost half of all Americans do not have a will, according to Gallup News.

Nevertheless, estate planning is a critical component of financial planning. It isn’t just about making your wishes known—it’s also an important opportunity to handle your assets in a tax-efficient manner and can prevent possible discord among your heirs.

No matter your stage of life, an up-to-date estate plan ensures your wishes are carried out when you pass.

Seven Essential Estate Planning Tasks

While we recommend you engage an estate planning attorney to draft legal documents, there are some simple steps to help you get started.

#1 Prepare a Will

A will is a legal document that governs how assets will be distributed upon your death and can be used to designate legal guardians for children.

If you die without a will, your assets will be distributed according to state laws without regard to your wishes. This means a court will determine how your assets pass.

It’s a good rule of thumb to update your will every five years, or whenever a life-altering event such as the birth of a child or a divorce occurs.

#2 Consider a Trust

While wills and revocable trusts both transfer your assets to heirs, a main driver for establishing a trust is often to avoid probate and ease the disposition of assets at death.

A revocable trust does not eliminate or reduce estate taxes any more than a properly drafted will does. A revocable trust does not offer creditor protection (nor does a will).

A revocable living trust can help older (and/or single) people from avoiding both probate and the need for a financial power of attorney. Other types of trusts can be used to, for example, postpone an inheritance until a beneficiary reaches a certain age, benefit a disabled child, support charity, or protect a beneficiary’s inheritance in the event of divorce or creditor issues.

#3 Designate Beneficiaries

Regardless of what your will stipulates, it is important to pay attention to assets such as retirement accounts and life insurance policies.

While many people believe insurance policies and IRAs will be divided according to instructions in their will, such accounts actually pass according to the beneficiary designations on file with the account custodian.

Therefore, it’s important to regularly review beneficiaries on all accounts to ensure consistency with your estate plan and to take advantage of estate tax planning opportunities.

#4 Title Assets Correctly

A will only governs assets held in an individual’s name. Joint property with right of survivorship, which passes directly to the surviving spouse, is not covered by a will.

If you have a trust, make sure assets you intend to be included in the trust’s distributive provisions are, in fact, titled in the name of the trust.

#5 Review Your Life Insurance Policy

Life insurance can play an important role in estate planning for certain individuals, whether it is used to pay estate taxes, debts, or leave assets to heirs.

If you have both a permanent life insurance policy and a taxable estate—currently above $12.92 million for federal taxes—it may be appropriate to use an irrevocable life insurance trust to hold the policy.

#6 Powers of Attorney

These documents name who will make financial or healthcare decisions for you in the event you become incapacitated.

When drafting a power of attorney, it’s best to separate financial and medical matters into two separate documents; a Power of Attorney for Finances, and a Power of Attorney for Medical affairs.

Without these specified powers in place, it can be very time-consuming and costly for the court to determine a representative for you. Even young adults should have powers of attorney in place, as parents lose the authority to make health care or financial decisions for their children once they are no longer minors.

#7 Make Health Care Directives

A health care advance directive is a document controlling how you want to be treated under various medical scenarios if you become unable to direct your own care.

Healthcare decisions such as life support, tube feeding, or other end of life care can be planned for with an advance directive. It also provides your medical power of attorney clear direction during what can be a very difficult time.

Take Estate Planning Off the Back Burner

Whether you’re young and healthy or edging toward retirement, life is unpredictable.

Estate planning can set your mind at ease and offer much-needed guidance for family and friends when it is needed.

While the seven steps discussed here cover the basics, estate tax laws are complex and change over time. We recommend working with a competent professional before making estate planning decisions.

Please reach out to your Vista team for advice on how best to proceed with your plan.