Four Defined Steps You Can Take to Shape Your Estate Plan

estate plan

Many people that do not have estate plans in place say that they know they should act, but they don’t know where to start. This is understandable when you are entering territory that is unfamiliar to you, and in this post, we will share four simple steps you can take to get started.

Assess Your Resources

You should evaluate your assets and gain an understanding of the resources that will comprise your estate. From a broader overview, if your estate is going to be worth millions of dollars, you should consider possible estate tax exposure.

The federal estate tax is applicable on transfers that exceed $12.06 million, but this figure is going down to $5.49 million indexed for inflation in 2026. We also have a state-level estate tax in Connecticut with a $9.1 million exclusion.

Moving on to the details that apply to most people, you should consider liquidating property for a couple of different reasons. One of them is the simple fact that you may need liquidity that you can spread around to multiple different inheritors.

There is also the matter of “stuff” that your children may not want or need. Your coin collection may be valuable, but if your children are not collectors and they have no knowledge in this area, they would be at a disadvantage. If you liquidate the items, you simplify the process.

A vacation home is another piece of property that can fall into this category. Yes, it’s nice to be able to get away, but the value of a prime piece of real estate can be used for more practical purposes.

Consider the Recipients

For one reason or another, everyone on your inheritance list may not be ready to handle a windfall. There are people that have a history of poor money management and bad decision-making, and there are those that have no experience handling large sums of money.

You can potentially establish a living trust with a spendthrift clause to provide for a loved one in a safe manner. While you are living, you would act as the trustee, so you would control the assets. After your death, the trust would become irrevocable, and the principal would be protected from creditors.

When you are drawing up the trust agreement, you establish the terms of the distributions. You can instruct the trustee to distribute a certain amount each month for a number of years until the beneficiary reaches a certain age.

This is one approach that can be taken, but you have total freedom. In addition to the spendthrift trust, an incentive trust can be used to entice a beneficiary to engage in, or refrain from, certain activities.

Many people with disabilities rely on Medicaid for health insurance, and they receive Supplemental Security Income (SSI). These are need-based benefits, so an improvement in financial status can cause a loss of eligibility.

As a response, you can make someone that is in this position the beneficiary of a supplemental needs trust. The trustee would be able to use the assets to make them more comfortable, but benefit eligibility would not be impacted.

These are a few of the scenarios that can exist, but there is always a tool in the estate planning toolkit to address any circumstance.

Establish an Incapacity Plan

Over 30 percent of people that are 85 years of age and older have Alzheimer’s disease, and this is not the only cause of incapacity among elders. If you have a living trust, you can name a disability trustee to serve as the administrator if it becomes necessary.

An agent that is named in a durable power of attorney for property can be empowered to manage assets that are not held by a trust. You should have one of these documents even if you have a living trust to account for property that was never conveyed into the trust.

A living will should be added to assert your life support preferences. Your plan should also include a durable power of attorney for health care to name an agent to make decisions for you that are not related to life-support.

The final piece to the puzzle is a HIPAA release form that will give your agent the legal right to speak freely with your physicians and access your health records.

Schedule a Consultation Today!

The fourth step is to schedule a consultation with an attorney from our firm. If you are ready to take it, you can set up an appointment at our Glastonbury or Westport, CT estate planning offices if you call us at 860-548-1000, and you can use our contact form to send us a message.


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