Estate Planning Checklist: What Do I Need to Get Started?

Proper estate planning should be exhaustive, but that doesn’t have to make it exhausting. The key is to start early and approach each task one by one. Over time, you will have assembled the information and documentation needed to concretely answer what you want to happen should you unexpectedly die or become medically incapacitated. More than that, “getting your affairs in order” allows you to take stock of the most important financial and legal aspects of your life, letting you feel in control and confident.

Getting started with estate planning on your own can be easy, but you may have questions or want advice. On top of that, you want to be sure that all your plans and intentions account for the most recent changes to state and federal laws. To help ensure that your plans are complete and acknowledge all legal obligations, it helps to work with a New Mexico estate planning attorney near you.

New Mexico Financial & Family Law has extensive knowledge and experience with probate, advanced directive planning, trust formation, will creation, and more. Work with a friendly, knowledgeable estate planning lawyer in your area when you call (505) 560-1287 or contact us online to schedule a no-risk consultation.

To help you prepare for your own estate planning, you can use the following checklists:

Take an Inventory of Your Physical and Intangible Assets

Your estate consists primarily of the things you owned in life. That can include physical, tangible ownership, like a car and a house. But it can also include intangible assets stored as 1s and 0s on the computer of your bank, broker, insurance carrier, or business registration office.

You want to include both types of assets and also your debts in your inventory reflecting your overall estate.

Physical Assets

For physical possessions, try to value each as accurately as possible. For vehicles, you can obtain a Kelly Blue Book value, for example. You can hire an appraiser to estimate the taxable value of your home as well as the current market value. For things like appliances and furniture, you can make estimates by looking on second-hand sales websites like eBay. Many collectibles markets can provide instant estimates based on certain items, including coins, baseball cards, or even video games.

Any time you are unable to estimate the value of an item, you can make an educated guess by researching similar items, or you can simply go by the value you think the intended beneficiary might be willing to pay to receive the said item.

Include the following in your inventory:

• Real property (e.g. your home)
• Vehicles
• Furniture
• Appliances
• Electronics
• Clothing
• Jewelry
• Heirlooms
• Linens
• Art
• Collections (books, other media, stamps, figures, etc)
• Kitchenware
• Other personal effects

Intangible Assets

You want a complete accounting of all of your bank and retirement accounts as well as life insurance policies, IRA, investments, and so forth. You can use recent statements from the past 6-12 months to estimate the current value for the accounts should you pass within the next few months.

Include the following intangibles in your personal inventory:

• Checking account
• Savings account
• CoD, Money Market, Credit union accounts, etc.
• Retirement accounts (401k, IRA, etc.)
• Stocks, bonds, mutual funds, options, etc.
• Life insurance policies (including any annuities)
• Homeowners insurance, car insurance, etc.
• Health savings accounts
• Equity or share ownership in a business
• Assets held in trust (more on that later)
• Additional life insurance policies from membership in organizations like AARP

Include Debts

Debts are, unfortunately, considered part of the estate. Your personal representative will be obligated to use your estate’s holdings to pay of any and all creditors with a valid claim. Only once these debts are paid will they be able to distribute assets to your family and loved ones.

Note that the only way to avoid giving creditors access to your estate is to form an irrevocable living trust, which essentially removes assets from your estate and places them in the care of a trustee on behalf of your beneficiaries.

Make sure to include the following in your list of debts:

• Home mortgage, HELOC
• Auto loans
• Student loans
• Personal/business loans in your name
• Credit card balances
• Outstanding balances for healthcare, etc.
• Outstanding taxes
• Any debt that has left a home lien or business lien
• Other debts

Review Your Current Listed Beneficiaries

Many of your current accounts and assets will already have someone listed as a primary beneficiary. This includes all retirement accounts and life insurance policies. It can also include certain bank accounts, property deeds, and other such holdings.

• Review life insurance beneficiaries, including death benefits and annuities
• Review retirement account beneficiaries, including IRAs and 401ks from old jobs
• Designate secondary and higher beneficiaries as a contingency

Remember to revisit your beneficiary lists often, especially as your life situation changes. One of the most common mistakes to make is when a person gets divorced and remarried yet neglects to change the beneficiary from their old spouse.

Be sure to take advantage of transfer-upon-death designations for available accounts, policies, and deeded properties. Designating someone as the beneficiary of a transfer-upon-death arrangement ensures the assets are not considered part of your estate and are exempt from probate.

Make Plans for Your Family’s Needs and Your Wishes

Leaving property to your heirs involves more than just generously giving them something to remember you by. In many cases, it’s also providing for their needs in the event that they suddenly lose their income and support. Accordingly, you want to make sure that your will, trusts, or other directives give explicit instructions for the following:

• Who will be the personal representative (executor) of your estate (include contingencies)
• Who becomes the guardian for your children or special needs family members (include contingencies)
• Any specific wishes or instructions for your children’s care
• The designated owner/guardian for any pets
• Financial support set aside for your spouse, children, pet care, home maintenance, etc
• Business continuity plans, including ownership transfers or automatic buyouts
• Set aside money for creditor claims, estate administration, the family allowance, and other probate costs
• Review your current life insurance policy coverages

Determine Your Advanced Healthcare Directives

Estate planning involves thinking ahead in the event of your medical incapacitation. This can mean you are in a medical coma, or it can mean that your current mental/physical condition is too weak to be able to make decisions for yourself.

Your advanced directive can include instructions for:

• What medical care instructions do you want in the event of incapacitation (your “living will”)
• Who you want to have Power of Attorney for Healthcare (Durable Medical Power of Attorney)
• How you want decisions to be made by your family (Supported Decision-Making agreement)
• Who you want to be able to manage your finances (Durable Financial Power of Attorney)

Review N.M. Stat. Ann. § 24-7A-4 for more information on drafting an advanced healthcare directive.

Additionally, you want to set aside funds or insurance coverage for your own long-term care in the event you acquire a severe illness, develop a life-threatening chronic illness, or have your medical condition deteriorate. There are different funding options available that include health savings accounts (HSAs), long-term care insurance, certain Medicare/Medicaid programs, and assets held in trust.

Provide a Convenient Trove of Documents and Basic Instructions for Your Personal Representative

Your last will and testament alone is likely not going to be enough to make managing your affairs easier in the event of your death. To make things as easy as possible for your elected personal representative, assemble all of the documents you need in one repository along with specific instructions for how to access and manage all aspects of your estate.

Include:

• Your last will and testament
• Any trust agreements
• Your HIPAA authorization and advanced healthcare directives
• Bank account and investment account information
• Insurance policy information
• Titles and deeds for real estate, vehicles, and other property
• Your up-to-date inventory list
• Recent tax returns and other documents
• Passports and other forms of ID
• Marriage license
• Birth certificate
• A list of current creditors and debts
• Information on recurring bills
• Legal documents related to divorce, settlements, etc.
• A list describing all of the above documents and their locations
• A list of all online/digital accounts and passwords
• A list of contact information for relatives and friends you wish to be notified

Draft a Will, and Consider Trust Formation

In order for your will to be considered valid in New Mexico, it has to be a physical document that was signed by you (or someone else at your express direction) and signed by two witnesses. There must be no competing versions, so make sure to date each copy and destroy any older versions, or clearly mark them as no longer valid.

It is prudent to review current state and federal laws that might affect your future plans. Speak with an experienced probate and estate planning lawyer in New Mexico, which allows you to be sure that your plans are valid and that they include instructions for all unique obligations.

While drafting your will, you may consider setting aside some of your holdings in trust. Forming a trust gives you the opportunity to appoint a trustee to manage the trust and beneficiaries who will receive the assets. You can also provide specific instructions for how and when the assets will be distributed. For example, you can provide funds for business continuity only under the condition that the business remains family-owned. A classic example is a fund designated to vest when the beneficiary graduates college.

Trust formation can also help you avoid some primary issues related to probate.

• A revocable trust (living trust) holds assets separately from your estate, allowing them to be exempt from probate in most instances. You can change the terms of your trust so long as you live.
• An irrevocable trust leaves your control once created. The benefit is that assets held in this trust can be shielded from both creditors and probate.

For a trust to be considered separate from your estate, it must be formed a certain amount of days prior to your death. If the trust is instead formed as part of the conditions of your will at the time of your death, its holdings will still very likely go through probate and be accessible by creditors.

Revisit Your Estate Plans Frequently With Help From Your Attorney

Your estate plans should be fluid documents that change to reflect your current situation and current sentiments. As you age, the assets you own may fluctuate, as can the balances in your account. You may also change your feelings as to who may be the most appropriate person to act as guardian of your kids, serve as your power of attorney, and so forth.

Accordingly, revisit your will, living trusts, advanced directives, and primary beneficiaries at least once every 2-5 years. Revise the documents according to your current realities and intentions, and verify that recent changes in state and federal law will not affect their ability to be carried out. It is also important to revisit these documents immediately proceeding a major life change, including when a grandchild is born, when you are married, when you are divorced, when you buy a home, when you retire from your business, when you receive a major health diagnosis, etc.

Estate planning involves living documents that change, grow, and adapt just as you do. Start the process, and then continue it with someone you trust when you reach out to an experienced attorney at New Mexico Financial & Family Law today. Schedule a case review and consultation with no obligation when you call (505) 503-1637 or contact us online.