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Bottom Line Up Front

  • To begin an estate plan, list all the property you own including personal property, real estate, bank accounts, investment accounts, retirement accounts and life insurance policies.
  • It’s important to make sure people you trust are available to ensure your wishes are followed. In a will, they’re called the personal representative—the person who will distribute your assets.
  • Beneficiaries listed in life insurance policies or bank and retirement accounts pass directly to them—outside of the will. But, they’re considered part of the estate for tax purposes.
  • Jointly owned property also passes directly to co-owners outside of the will.

Time to Read

4 minutes

March 1, 2024

Why You Need an Estate Plan

Lots of Americans haven’t really thought much about estate planning. Other priorities demand their attention. They may think they don’t have enough money, or maybe they just don’t know where to start. The truth is, making a plan ahead of time can save your loved ones time, stress and money if the unexpected happens. They won’t have to guess things like:

  • how you’d want things managed or distributed
  • who should have guardianship of your children
  • what you want to happen if you’re unable to make decisions for yourself

Plus, it can help them save on taxes and streamline the probate process. Some of the most common documents created during estate planning could include a will, a trust, guardianship documents, financial powers of attorney and advance directives for medical decisions, also known as a living will. 

Getting Organized

If you’re wondering how to get started, here are 7 tips to help you get organized:

  1. Review and organize information on your assets and debt. Start by answering these questions:

    • Do you own a vehicle, a home or other property?
    • Do you have life insurance or a pension?
    • Where are your banking and/or investment accounts? 
    Make sure the person who will be carrying out your wishes knows where to find your life insurance policies, deeds, titles, pension and financial account information and any other important documents. Prepare a list of accounts with account numbers. For online accounts, keep a list of passwords in a safe place and let your representative know where it is.

    Your representative also will need to know whether you owe money, how much and to whom. They’ll need access to credit card and any other debt information with account numbers and passwords, if appropriate.
  2. Review and update your beneficiary/beneficiaries. Check your accounts or policies where you’ve listed a beneficiary. Making sure your beneficiaries are up to date is especially important, because funds to named beneficiaries will pass to them directly—outside the will.

    What to review. Places where you typically name beneficiaries include insurance policies, employer and individual retirement accounts (IRAs), annuities and bank accounts.
  3. Create a will.  A will allows you to direct how you want your money and personal property distributed and to name a personal representative to carry out your wishes. If you have minor children, you can name their guardian(s). Without a will, a probate court will make those decisions and divide your estate according to state law—which may not be in your family’s best interest.

    How to get started. You can hire an attorney to draw up your will or use an online template like those available from Trust & Will to write it yourself.
  4. Decide whether you need a trust. When family members lack financial skills or where minor children are involved, having impartial trustees who have a legal obligation to manage funds and property in their best interests makes sense. Trusts can be used to:

    • manage assets
    • transfer property
    • protect assets for minors until they become adults
    • provide for a child with special needs
    • provide for a surviving spouse
    • provide for children from a previous marriage
    • set aside money for your children’s education
    • stagger when your heirs receive money
    • donate to a charity
    Trusts can relieve heirs of the duties of managing assets. They can also spell out conditions heirs must meet before receiving assets. But, trusts do come with costs. Some examples are attorney fees for drafting the trust document, trustee fees for trust management and tax preparation fees, because trusts require their own tax returns. That said, depending on the size of the estate and the complexity of the needs of the beneficiaries, a trust may be a very useful tool—even with the additional costs.

    How to get started. If your trust needs are basic, Navy Federal Credit Union offers trust, will and estate management services to help you manage and transfer assets yourself.
  5. Decide if you need a financial power of attorney. A financial power of attorney allows a trusted person to legally manage your financial decisions if you can’t.

    How to get started. An estate-planning attorney can help you draft the legal forms to assign power of attorney and specify the circumstances and conditions for it to go into effect.
  6. Consider setting up a living will. A living will allows you to specify in writing the kinds of healthcare you do or don’t want in certain circumstances. This provides your healthcare providers a roadmap if you’re unconscious, unable to communicate or become mentally incapacitated.

    How to get started. Each state has a different process for setting up a living will. You may be able to get forms from your healthcare provider or your state department on aging.
  7. Decide if you should designate a healthcare proxy. A healthcare proxy, also known as a healthcare agent or someone who has been given a medical power of attorney, is someone you trust to make medical decisions on your behalf if you're not able to.

    How to get started. The American Bar Association offers a toolkit and guide for advance healthcare planning. Often, living wills as described above allow the naming of an individual to function as a medical power of attorney.

Navy Federal Investment Services Can Help You Start Your Plan

Not sure what you need or still have questions? You can set up a no-cost consultation with one of our financial advisors. To find an advisor near you and to set up an appointment, visit our advisor locator page.

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This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.