Estate Planning Checklist: Simple as 1-2-3

Information courtesy of USAA Life Insurance Company and USAA Life Insurance Company of New York

Let's face it: For a lot of people, estate planning is something that you put off until later. And, for those who are taking care of their planning now, the details on how to get it done can seem daunting, so many just give up on the process.

Someone once said about estate planning that "it's difficult to think about and impossible to ignore — like an elephant in the room."

The problem with delaying our estate planning is that we can't predict the future. If you're incapacitated tomorrow, who will continue to pay your bills, manage your assets, and make health care decisions?

Here are some steps to consider as you start, or pick up again, your estate planning process.

1. Take inventory of the who, what, when, where and why.

It's often said that estate planning is simply the process of making sure that "what you have and control passes to who you want, when you want, and according to any special circumstances."

Who

Who in your life do you deeply care about and wish to provide for in your estate plan? These can include not only people but also institutions and charities.

What

Consider your assets, including your home, investments, bank accounts and more. Additionally, reflect on how these assets are owned, whether through methods like Joint Tenancy with Right of Survivorship or JTWROS, IRAs or trusts.

Identify any concerns or fears you may have regarding how your estate will be distributed, such as the desire to safeguard an adult child from an untrustworthy in-law.

When

Determine when you want specific events to occur concerning your estate, such as making gifts during your lifetime, the distribution of inheritance upon your passing or other significant life events like a grandchild's college graduation.

Where

Take into account the physical location of all your assets, as state laws can play a crucial role in estate planning. Consider how those responsible for handling your estate in the event of your incapacity or passing will locate and manage your assets effectively.

Why

Examine the reasoning behind the way your assets are currently arranged. For example, why is the primary residence, shared with your spouse, titled in your name only? Or why are there no beneficiaries named for your IRA? Did you really intend for your ex-spouse to receive the proceeds of your life insurance policy, or did you just forget to change the beneficiary designation?

This first step is critical because everyone's situation, needs, concerns, fears and timelines are different.

2. Draft your estate plan.

Once you've answered the questions in step one, you and your legal counsel will have a better idea of what you want to accomplish and can identify any gaps in your current plan.

For example, say you've created a revocable living trust with the help of an estate planning attorney but never retitled your assets to be held in the trust. Once you know what you want to do you — or your legal counsel — can consider the various tools used in estate planning:

Will

A will is a legal document that disposes of assets that aren't disposed of by other means. It can create a trust to control assets for family members if they're unable to do so themselves, it can nominate guardians for minor children, and it can be very detailed or provide only general guidelines.

A will requires probate, which isn't necessarily a good or bad thing, depending on individual circumstances and state laws.

Trust

A trust is an agreement between three parties: the person making the trust to benefit another person or entity, those who will receive the benefits of the trust, and the person or entity with the responsibility of managing the trust.

Trusts can be created during life or at death and can be revocable or irrevocable. They are subject to state law and can avoid probate.

Form of ownership or operation of law

The way you own something can affect your estate planning. Joint tenancy with right of survivorship - JTWROS, or payable or transferable on death,- POD or TOD, are types of ownership that can supersede the will and may avoid probate. For a more in-depth view, see our related article on pros and cons of joint bank accounts.

Beneficiary designations

The persons named as beneficiaries on your retirement plans, insurance policies or annuity contracts may also supersede your will. Assets that pass by beneficiary designation aren't subject to probate either. One of the most common beneficiary designations to be made occurs when we obtain life insurance.

Powers of attorney, or POA

This gives someone the power to act on your behalf and can be broad or narrow – general or special. The POA can take effect when you become disabled, "springing" power, or it can be effective both before and after disability — "durable" power of attorney — allowing the holder to act on your behalf at any time.

Advanced health care directives

These directives, known as a durable power of attorney for health care or HCPOA, living will, or do not resuscitate orders, determine who will make decisions for you if you're medically incapacitated, or what steps you'd like to be taken to keep you alive.

3. Put your estate plan into action.

Once you know what you want to accomplish and understand which tools will help you reach those goals, it's time to implement your plan and keep it up to date.

Seek help as needed.

Depending on your situation, you may be able to take care of things on your own by using online legal assistance. If you need help, you can get qualified legal counsel from an attorney, CPA or JAG office. Keep in mind that you often get what you pay for, so don't try to scrimp on good legal advice when you need it.

Understand that it's still up to you.

Although an estate planning attorney may draft legal documents like your will, trust and POAs, among others, you're still responsible for implementing the plan. While you may have a POA drafted by the attorney, many banks and financial institutions may require that you complete their own POA. You can usually complete these forms online, such as with USAA's Power of Attorney.

Since there can be quite a bit of variation between POAs, using the institutions' POA forms is advisable. In addition, you'll need to complete the beneficiary designation forms at the various institutions to ensure that your property passes to who you want it to. You'll also need to retitle any property that's to be owned by a living trust.

Update your estate plan regularly.

You'll want to review your plans whenever significant life events occur — such as births, deaths, or marriage — or at least every couple of years, to make sure changing circumstances don't require changes to your estate plan.

Since estate planning laws can vary between individual states, it's highly recommended that you seek help from a qualified professional as you dig deeper into your own plan.

• If you're inclined to do your estate planning online, start by visiting Trust & Will.
• Active-duty service members and their dependents, as well as retired or disabled service members and their dependents, may be eligible to take advantage of no-cost legal assistance. Commonly known as JAG, this service can include estate planning.
• To find a general legal services provider within the continental U.S., visit the U.S. Armed Forces Legal Assistance Locator.^{See note1}
• If you're a USAA member dealing with the loss of a loved one, you and your family can find help at USAA Survivor Relations.
• Still undecided? Browse more educational resources or find a local attorney who specializes in estate planning at the American College of Trust and Estate Counsel.^{See note1}