Six Steps to Create an Effective Estate Plan

Estate Planning

Written by: Marty Shields, CFP®, AIF

Developing an estate plan is not high on many people’s to-do list because it can be overwhelming to think about, and everyone hopes it is not needed until many years in the future. The fact is that life is uncertain and if something were to happen, the difference between having a well thought out plan and not having one can have a dramatic impact on your family. This article provides the six steps you should take to make sure you have an effective estate plan.

1. Create an Inventory of all Assets

This is a great starting point because it allows you to consider everything you have, and this inventory will be needed when estate documents are drafted. Below are the items you will need to include:

  • Homes, land or other real estate
  • Vehicles including cars, motorcycles or boats
  • Collectibles such as coins, art, antiques or trading cards
  • Other personal possessions


The intangible assets in an estate may include:

  • Checking/Savings accounts and certificates of deposit
  • Stocks, bonds and mutual funds
  • Life insurance policies
  • All investment accounts including workplace retirement accounts
  • Ownership in a business
  • A listing of all your passwords and usernames for any online access
  • Contact information for your attorney and financial advisor

2. Assess Your Family’s Finances

It is important to understand how your family will function financially when you are not in the picture.  One of the primary ways to protect them is through life insurance.   This requires an assessment of your future financial obligations.

3. Establish Your Directives

A complete estate plan includes the following legal directives.

  • Wills – A will is a legally binding statement directing who will receive your property at your death. If you do not have a will, the state will determine how your property is distributed.
  • Trusts – With changes in the tax laws over the past decade, having a trust in an estate plan is not as common but depending on the size of your estate and your need to control how assets are used when you a deceased, it may be necessary to have a trust. The other use of a trust is to move assets outside an estate to protect them from being used for assisted care expenses and to qualify the individual for Medicaid to cover these expenses.
  • Medical Care Directive – also known as a living will, this document spells out your wishes for medical care if you become unable to make those decisions yourself
  • Financial and Medical Power of Attorney– These documents will designate individuals who can act on your behalf if you are incapacitated. In these documents, you can describe the scope that you want them to be used and any limitations you want to put into place. You might want to assign the medical and financial representation to different people, as well as a backup for each in case your primary choice is unavailable when needed.
  • Children Guardian – Name a guardian and backup guardian to care for your children. It is important to document your wishes for your children’s care.
  • Name an Executor for your Estate – This individual’s main duty is to carry out your instruction listed in your estate plan.
  • It is important to have a discussion with any individuals you have named in your estate documents to make sure they understand their roles and your intentions.

4. Review Your Beneficiaries

All your retirement accounts and life insurance policies will be transferred based on who is listed as the beneficiary, so it is important to make sure they are updated and accurate.  The beneficiary listed will override any information listed in your will.

It is also recommended that a Transfer on Death (TOD) beneficiary is added to any bank and taxable investment accounts.  This attachment will determine where these accounts will transfer at your death and will prevent them from going through probate.

5. Confirm You are Below Federal and State Estate and Inheritance Taxes

Estate planning is often a way to minimize estate and inheritance taxes. But most people won’t pay those taxes.

  • At the federal level, only very large estates are subject to estate taxes. In 2022, up to $12.06 million is exempt. What if you have a larger estate that surpasses the federal tax exemption limits? You may want to consider a grantor retained annuity trust, or GRAT, a type of irrevocable trust that can help reduce the amount of taxes your heirs pay.
  • Some states have estate and inheritance taxes. They may levy estate tax on estates valued below the federal government’s exemption amount. (See which states have an estate tax here.)

6. Plan Your Funeral or Memorial Services

Considering that this event will be the time to have your loved ones celebrate your life, it is worth your time to highlight what you want to occur or not occur.  Having everything planned will make it easier for your family who will be dealing with their grief from your death.

The team at Bouchey Financial Group would love to partner with you in your financial planning process. Feel free to contact us to learn more about estate planning today.


Bouchey Financial Group is a fee-only, fiduciary, financial advisory firm with locations in Saratoga Springs & Troy, NY.

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