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The 7 “Action Steps” Missing from Your Estate Planning Checklist and Strategy

Last update on: Aug 07 2020
estate planning

Most people, especially those with at least modest wealth, have engaged in some Estate Planning.

Yet few people have complete plans. More likely than not, your estate plan is going to have gaps.

There are plenty of anecdotes to support the statement, but there is also concrete evidence.

I regularly see surveys of either estate planning professionals or wealthy people with substantial assets. They always indicate that even people with financial sophistication, substantial assets and access to top advisors have significant shortcomings in their plans.

Now many plans these days do a good job of having all of the standard documents, such as a will, trusts, power of attorney and more.

The absence of these key documents is not the type of lapse I’m talking about. Instead, I am pointing towards the fact that key planning steps aren’t often attempted or fully completed.

You can avoid having a failed estate plan by ensuring your plan isn’t riddled with the oversights and shortcomings that frequently occur.


ESTATE PLANNING ACTION STEP # 1:  Make Certain Your Plan Has Cash Flow

Your estate will need some cash. Even when there won’t be any federal or state estate taxes, there are other cash needs.

The property you own must be managed and maintained while the estate is being settled. Even if your only substantial property holding is a home, there will be continuing expenses for utilities, real estate taxes and any maintenance and repairs needed.

The expenses of dependents also must be paid during this time. Factors like the size of your estate, the probate process of your state, and how organized your estate is, will affect how long the estate settlement process takes.

Moreover, your outstanding debts must be paid as part of the estate settlement, and there will also be a final income tax return for you and an income tax return for the estate, possibly with taxes due.

In addition to above mentioned expenses, any professionals who work on settling your estate must be paid. There also must be money for any cash bequests in your will.

Because too many estate plans don’t have liquidity plans, it’s not unusual for an estate to have cash flow problems during the settlement process. You don’t want assets to be sold at inopportune times or in a hurry to raise cash to pay the estate expenses.

All these reasons are why a complete estate plan includes an estimate of cash flow. The estimate includes both the continuing expenses the estate will assume and the additional cash needs generated by your passing and the settlement of the estate.

Of course, the estimate must include sources of cash to pay these items.


ESTATE PLANNING ACTION STEP # 2:  Keep Your Digital Assets in Order

The law often lags well behind what’s happening in the real world, and the treatment of digital assets in estate plans is a prime example.

Only in the last year or so have a few states revised their laws to establish clear rules. I’ve tried to be near the forefront of advising people that the treatment of digital assets has to be included in their estate plans.

Be sure your will and other estate planning documents control the future of your email accounts, websites, social media accounts, access codes to websites and other digital assets you own.


ESTATE PLANNING ACTION STEP # 3:  Communicate Information and Instructions 

No one knows your estate as well as you do.

The problem is that most people assume that their executors, trustees and loved ones either understand their estate or will be able to figure it out after a quick study. Things usually work out differently, especially when loved ones are grieving.

An essential element of every estate plan that too many people overlook is what I call the instruction letter.

It can also be a book or a file. It can be in a digital format, if that’s easier. I often refer to it as the best gift to leave for your heirs.

The essence of the instruction letter is the basic information telling your heirs everything they need to know to administer your estate quickly and efficiently. It also contains advice on how to manage or dispose of certain items in your estate.

The letter should be accompanied by additional documents.

Ideally these documents should identify and provide access information to all of your financial accounts, insurance, property, digital assets, debts and anything else that is part of your life. It should also be accompanied by recent income tax returns and financial statements.

I’ve put together a workbook that can help you get started, titled, To My Heirs: A Book of Final Wishes and InstructionsCick here for immediate access now – it’s available for a modest fee on my website.

Next week: 4 more estate planning action steps every family should take.



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