Estate Planning Basics: 7 Easy Steps to Make an Estate Plan

By  //  February 15, 2023

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The growing awareness and adoption of estate planning don’t exactly make the process any less tedious. However, it’s still a prudent step for most people trying to ensure stable finances for their heirs.

Warren Buffet had this to say at one time, 

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Family estate planning is necessary and should begin as early as possible. In this article, we’ll discuss in depth the importance and steps of estate planning. We’ll also explain who needs it and some essential tips and best practices.

What is Estate Planning?

Estate Planning is the specification of how you want your assets managed and transferred after you pass or if you are incapacitated. The common goal is to ensure that your beneficiaries receive your assets with minimal gift taxes or other tax impacts.

Note: Your estate doesn’t only mean your buildings. It comprises every property you own.

Why is Estate Planning Important?

Creating an estate plan is essential because you want to ensure that the assets you’ve spent a lifetime building are adequately managed and eventually transferred to your beneficiaries. With a comprehensive plan, you can rest assured your loved ones’ finances are secured.

Unfortunately, only about 33% of Americans have estate plans. That means the remaining 67% of assets are up for grabs in the event of death or sickness.

Who Needs to Do Estate Planning?

Everyone needs to do estate planning. One general misconception about planning your estate is that it’s the duty of older people. Everyone can start gathering information on estate planning and start thinking about how to fix an estate plan from the age of 18 years.

What Documents Will You Need for Your Estate Plan?

For a comprehensive plan, you will need the following documents;

  • Guardianship

Guardianship dictates your wishes regarding the care and welfare of your children or beneficiaries if you pass or become incapacitated. 

  • Will

A will is a legal document that states how you want your assets shared when you pass. Having a will is the most comprehensive financial advice for business owners looking to preserve their companies.

  • Trust

Trust is a legal fiduciary agreement between three parties that allows the first party (the Trustor) to put the second party (the Trustee) in charge of the assets on behalf of the third party (the Beneficiary). 

  • Financial Power of Attorney (POA)

A POA is a legal document that gives someone else the right to review estate planning options and make decisions on your financial affairs.

  • Durable Power of Attorney (POA)

Slightly different from the Financial Power of Attorney, the Durable Power of Attorney (POA) gives someone else the legal rights to handle any of your non-health or non-medical affairs. 

  •  Advance Healthcare Directive (AHCD)

An Advance Healthcare Directive is a document involved in estate planning that directly states your wishes for medical actions if you become incapacitated and cannot make decisions. 

  •  HIPAA Authorization

Allows a third party to see your personal medical records or information. 

 7 Tips for Basic Estate Planning

These few tips for simple estate and will planning should help you:

  • Do an asset inventory. 

The most common reason for the absence of a housing estate plan is the belief that there is not enough wealth to pass down. But when you understand what assets are and get more intentional about listing them, you will realize you have some valuable tangible and intangible assets.

Your tangible assets can include homes, vehicles, and collectibles.

The intangibles may consist of the following:

  • Savings accounts 
  • Stocks, bonds, and mutual funds
  • Life insurance policies
  • Retirement plans,  etc
  • Take care of your family’s needs.

Consider the following estate planning steps to preserve those assets for your family when you pass. You can do this by 

  • Getting enough life insurance,
  • Naming a guardian for your children while planning your will to avoid expensive family court fights,
  • Stating your wishes for your children’s care in a legal document. 
  • Define your directives.


Fix a comprehensive plan that includes the following essential legal directives.

  • A trust to assign parts of your property to people or causes. You can also get a trustee to provide estate planning help, manage, and eventually transfer portions of your property to your beneficiaries, 
  • A medical care directive to state what it is you want for medical care if you cannot make a choice yourself. 
  • A durable financial power of attorney that allows someone else to manage your finances
  • A limited power of attorney allows limited authority for your representative if you are skeptical about transferring your assets to someone else. 

  • Review your beneficiaries.

These simple estate planning documents are not a one-time assignment. They should be open to reviews as you experience changes in your life. Reviews may involve;

  • Updating the beneficiaries of your retirement plans and insurance products 
  •  Ensuring the appropriate people get portions of your property. Update the beneficiaries as people come into or leave your life and as you keep understanding estate planning.
  •  Filling every beneficiary section so there is a designated heir if an account goes through probate.
  •  Naming alternative beneficiaries in case your primary beneficiary passes before you or you forgot to fill in the primary heir.
  1. Consider your state’s estate tax laws.

Remember that real estate planning aims to minimize estate and inheritance taxes. For example, according to the federal government, only massive estates should pay these taxes. 

However, some states may levy an estate tax on properties valued below the federal government’s exemption amount. At the same time, some states may charge inheritance taxes for the people who inherit your money.

  1. Consider seeking professional help.

It would be best if you considered hiring an estate tax professional to answer your questions about the estate planning process. They can suggest the best plan to minimize the estate or inheritance taxes.

They also serve as objective third-party professionals to help you maneuver difficult decisions, like selling your business advice.

  1. Remember to review

Even life changes. Your estate plan should too.

Review your plan as situations change, from childbirth to marriage, loss, divorce, etc. But if nothing changes, laws may. So, review your plans to ensure they are optimized to secure your financial goals.

Final Take

So, now that you understand the importance of an estate plan, you should consider getting an estate planner to prepare a personalized structure.

This will take the burden off your shoulders, protect your family, and give you and your family that much-deserved peace of mind. 

Interactive Wealth Advisors is a Portland, Oregon Fee-Only financial planning firm serving Portland and all surrounding areas. We offer objective advice on estate planning to help our clients build, manage, grow, protect, and transfer their assets through life’s transitions.