Estate Planning Checklist: 5 Tasks to Do Now, While You’re Still Well

Being prepared is going to feel great, you’ll see. As you work your way down the list, make sure you communicate your decisions with your loved ones.

A woman checks off items on a checklist.
(Image credit: Getty Images)

It’s difficult to think about what may happen if your health starts to decline — or how your loved ones will carry on after your death. But doing nothing to plan for these events could result in you losing control over your affairs while you’re still alive, and undesired confusion and anger after you’re gone.

You can help prevent these unwanted consequences from occurring by making these decisions while you’re still healthy, documenting them, and communicating them in advance to your loved ones. While there are many issues to think about, here are four decisions you should move to the top of your priority list.

1. Documenting Your Health Care Wishes

It’s important to make sure family members and friends are aware of your medical treatment wishes before a health care crisis takes these decisions out of your hands. Fortunately, there are ways you can formally document these directives in writing so there’s no misunderstanding.

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Health care proxies

A health care proxy, also known as a medical power of attorney, is a legal document that authorizes one or more people to serve as health agents who can make medical decisions on your behalf should you become physically or mentally incapacitated.

Most people assign their spouse or partner as their primary health care agent and one of their children or a close family member or friend as an alternate agent should the primary agent pass on or also become incapacitated. Generally, each state has its own health care proxy/power of attorney forms.

A living will

These legal documents allow you to specify which kinds of treatment and long-term care options you prefer. In the form, you specify whether or not you wish a physician to employ resuscitation procedures, ventilators, tube feeding or other life-sustaining procedures.

Medical Orders for Life Sustaining Treatment (MOLST)

Also called a physician orders for life-sustaining treatment (POLST), this form is a set of medical orders signed by a doctor for patients after they’ve been diagnosed with advanced illness who could die within the next few years. You can create this form even if you’re not ill. It will only go into effect if you’re facing an end-of-life situation.

Most states have their own form, which must be signed by you and a physician. Unlike a living will, it is not generally considered a legal document. Instead, it is a doctor’s order.

Organ donations

If you’ve never registered as an organ donor with your state, you can do it online. Start at (opens in new tab) to connect to your state’s donor registry.

Interment agreements

If you’ve already made arrangements with a funeral home or a cemetery, make sure your loved ones are aware of this.

Note that some states have comprehensive Advanced Healthcare Directive forms that allow you to designate health care agents, specify treatment preferences, and authorize organ donations in a single document.

Once you’ve filled out any of these forms, make several copies and give them to your chosen health care agents and your estate attorney. While you don’t necessarily have to give them to your children, friends or family members, you should consider discussing your directives with them.

2. Choosing an executor

The executor will be responsible for managing the distribution of assets in your estate. These could include your home, your non-retirement investments, your vehicles and other valuable items.

Your executor doesn’t have to be a legal professional. As long as you've assigned an estate attorney to do the heavy lifting, anyone can serve as executor, including your children, a family member or a close friend.

If you ask a non-professional to serve as executor, make sure they understand their responsibilities. It could take months or years for your estate to be settled. During this time, your executor may need to have multiple in-person meetings with bankers, appraisers, attorneys and state and local officials.

Once you’ve chosen an executor it’s a good idea to introduce them to your estate attorney, even if it may be years or decades before they’ll have to work together. And remember that you can change your executor — or add a co-executor — at any time.

Whomever you choose for this role, make sure your heirs are aware of this decision.

3. Protecting Your Financial Interests

Many parents don’t want their heirs to know how much they’re worth — or how much they may inherit. It’s perfectly acceptable to keep this information close to the vest, but it may be a good idea to set their expectations, especially if they believe they’re going to receive much more than you intend to give them.

There are additional steps you should take to protect your financial security.

Assign a financial power of attorney

At some point, you may want to fill out a financial power of attorney form to give control of your finances to others, should you no longer be able to manage them yourself. Like a health care proxy, usually a spouse or partner is assigned as a primary proxy, with a child or other family member or close friend as an alternate.

Anyone can serve in this role, but preferably they should have a strong understanding of personal finance and investing. Should a health care crisis require them to intercede on your behalf, they’ll need to make critical decisions that may involve significant adjustments of your investment strategy and accelerated withdrawals from your banking and investment accounts to fund your medical and long-term care expenses.

Once you assign financial power of attorney, give this person an overview of all of the assets held in your banking and investment accounts as well as any outstanding debt obligations. Also consider introducing them to your financial adviser, accountant or estate attorney so they can get to know each other before a crisis requires them to start working together.

Discuss your trust

If you’ve placed most of your assets in a trust to remove them from your estate, make sure your heirs understand this decision.

This kind of disclosure is particularly important if you’ve transferred your home, vehicles, private business shares, artwork or jewelry to the trust and have instructed the trustee to sell these assets after you and your spouse or partner have passed on. Your heirs may be upset by these decisions, but at least they'll know in advance that they shouldn’t expect to take ownership of these assets.

Examine tax issues for beneficiaries

While the beneficiaries of your trust generally won’t have to pay taxes on the value of the principal they receive after you’re gone, they may have to pay taxes on any earnings or income they receive.

Also, if you plan for your heirs to inherit any money remaining in your 401(k) or traditional IRA, make sure they’re aware of this, since they may have to pay taxes on any required distributions or withdrawals from these accounts. If you're able to convert some or all of these assets to a Roth IRA while you're still alive, your heirs won't have to pay any federal taxes on distributions or withdrawals from balances they inherit. But you will have to pay taxes on the amounts you convert, so it’s up to you to decide whether to take the “Roth conversion tax hit” yourself, or avoid converting and let your heirs deal with the tax consequences after you’re gone.

4. Finalizing Your Will

Hopefully, you’ve written a will that clearly specifies how your assets will be distributed. You may be hesitant about discussing it with your heirs, but you should consider doing so, especially if they’re under the mistaken assumption that they’ll be inheriting the bulk of your estate.

If this isn’t true — for example, if you plan on leaving most of your wealth to charity — then it may be better to inform them of this decision sooner rather than later.

5. Creating a ‘Need to Know’ File

Once you’ve made these critical decisions, it’s important to communicate them ahead of time to those who will be most impacted. If you don’t feel comfortable talking about these issues in person, consider recording a video where you explain your wishes and tell them what steps you’ve taken to document them.

Make it easy for people to access the information they need to carry out your wishes by creating a comprehensive “end of life” file. It should include:

  • Copies of your health care and financial proxy forms.
  • Copies of your life insurance policies.
  • Contact information for your primary care physician, medical specialists, attorney, accountant, financial adviser, life insurance agents or any other professionals they may need to contact in a health care emergency or after your death.
  • At least one copy of your bank, investment, mortgage and loan statements.
  • A list of all your credit card numbers and any associated PINs needed to access these accounts.
  • User names, password and personal identification numbers for all of your online accounts, including social media accounts.
  • Any interment agreements you’ve already made with a funeral home or cemetery.
  • The location of vehicle titles, deeds, mortgage documents and past tax returns and records.
  • If you’re a business owner, copies of any business succession plans and the location of ownership-related documentation.

Thinking through these end-of-life issues can cause a great deal of anxiety. But if you can make and communicate these discussions while you’re still physically and mentally healthy, you’ll help make it easier for your loved ones to deal with these issues when the time comes.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Joelle Spear, CFP®
Financial Adviser, Partner, Canby Financial Advisors

Joelle Spear, CFP® is a financial adviser and a partner at Canby Financial Advisors (opens in new tab) in Framingham, Mass. She has an MBA with a finance concentration from Bentley University.
Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.