How Can I Set Up an Effective Estate Plan?

Effective estate plan
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Creating an effective estate plan requires intentionality.

Many people do not prioritize estate planning.

If you are taking steps to create a plan, you may think whatever you do will be sufficient.


This mindset could set you and your loved ones up for trouble in the future.

The good news?

You will be dead when the estate planning train leaves the proverbial tracks!

According to a recent Forbes article titled “7 Steps to Ensure a Successful Estate Plan,” there are many ways to sabotage an effective estate plan.

An effective estate plan is possible with help.
An effective estate plan requires preparation.

What can you do to prevent this?

Communicate the purpose behind your plan.

Often heirs are not equipped to successfully manage inherited assets.

A trust can protect your children from their own poor choices.

With limited access to trust assets, you can ensure your children are educated when it comes to managing wealth before they actually inherit large sums.

By explaining how you manage your money, you can help them make wiser decisions and appreciate your estate plan.

Anticipate conflicts within your family.

No family is perfectly free from squabbles.

In fact, sibling rivalry went as far as fratricide in the first human family.

Differing personality and mindsets often bring conflict.

An effective estate plan takes into consideration whether certain details might intensify or trigger resentment within the family.

For example, it may be wise to avoid joint property ownership between rival siblings.

Plan prior to making gifts.

Although gifting may benefit your estate plan, it may be counterproductive for your loved ones.

By simply writing a check, your gift may be squandered.

By gifting property instead, this may be used more thoughtfully by your children.

Understand the basics of your plan.

Key to an effective estate plan is being able to understand it.

Take time to ask questions of your estate planning attorney about the recommendations and design.

Organize, simplify, and prepare.

Settling an estate can take a long time.

This period of time will likely be extended further if your documents are disorganized and cannot be easily located.

Educate your executor and trustee on plan details and ensure that they know how to access your documents.

Develop business succession plan.

If you have a small business, you need to include a succession plan in your estate planning.

As the source of your wealth, the value of the inheritance you leave your loved ones can decline quickly when you are no longer alive.

An effective estate plan includes an business succession plan where you designate who will run the business and how the transition will take place.

If your family will not run the business when you die, you truly need to develop a plan for selling the company.

Fund your living trusts.

A common mistake is to include a revocable living trust in your estate plan and then not fund the trust.

If the trust is not funded, then it will be no good to you when your intention was to avoid probate.

Be sure to retitle and transfer assets to your trust.

By following these steps, you can create an effective estate plan.

Oh, and remember to review your estate plan at least every two years with your attorney or on your own.

Good old entropy (that pesky Second Law of Thermodynamics) is alive and well when it comes to inevitable changes impacting your estate plan.

Reference: Forbes (May 21, 2021) “7 Steps to Ensure a Successful Estate Plan”

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