8 Smart Estate Planning Steps to Die the Right Way

By Jane Bennett Clark, Patricia Mertz Esswein, Lisa Gerstner

published 29 November 2011

If you're coming up with these or other reasons for not planning for death, you're in good -- if not smart -- company.

Just over one-third of Americans have a will, and fewer than half have any estate-planning documents at all, according to a 2011 survey conducted for EZLaw.com. "People don't want to think about dying. They're uncomfortable with the topic," says Danielle Mayoras, coauthor with Andrew Mayoras of Trial & Heirs (Wise Circle, $20). "For that reason, they don't do anything about estate planning."

But making arrangements for your final days and beyond isn't just about helping your family through difficult times. It also lets you designate representatives to make decisions about your care, withdraw money from your accounts to pay your bills and celebrate your existence in exactly the way you want -- even if that means letting you take your last ride, to the cemetery, in a less-than-likely vehicle.

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Die without a will and you let complete strangers decide how to split up your estate and raise your children. It's called dying intestate, an act (or failure to act) that leaves the divvying-up process to state law. In lieu of a will, the court gives first dibs to a spouse and children, followed by other relatives. If you have no family, your property goes to the state. And unless you appoint a guardian for your minor kids in a legally executed will, their future will be determined by the court.

To figure out how much life insurance you need, estimate what it would cost to pay off your debts, such as a mortgage and car loans, and to fund savings goals, such as college for your kids. With these needs accounted for, your family may be able to live comfortably on about half of your current pretax income. Divide that amount by 5% to determine how much you'll need. So it would take $1 million to produce $50,000 of annual income.

To listen to some people, you'd think letting your estate go through probate was worse than death itself. Don't take their word for it. The probate process, by which your executor settles your debts and disburses your property, could be a simple matter of filling out forms and paying a few hundred dollars in filing fees. But it could also be a months-long ordeal that ties up your estate and costs thousands of dollars in legal fees and other expenses.

Before you start fretting about the latter scenario, consider that some property isn't subject to probate at all. Life insurance death benefits and the money in retirement accounts pass directly to your named beneficiaries, and property owned jointly with the right of survivorship -- say, a house or a car -- transfers automatically to the co-owner. You can also arrange for bank and other accounts to be transferable or payable on death, giving the recipient immediate access to the money.

In fact, living trusts can be a valuable tool for people who want to keep their affairs private, avoid a drawn-out probate or disinherit a family member. "It's more difficult to challenge a trust than a will," says Richard Durso, a certified financial planner in Philadelphia. But the arrangement requires punctilious attention to detail. Fail to retitle even one asset and you kick the estate into probate, defeating the purpose of the living trust.

To head off family conflict and avoid the cost of updating your will in the future, state in your will that you have left a separate, signed list of bequests. You may revise the list at any time free, but date it in case survivors find an earlier version. You can also specify a strategy for divvying up the rest of your property. For ideas, see Who Gets Grandma's Yellow Pie Plate? ($12.50). One option: Your executor can set up an online auction at eDivvyup.com (99 cents per 100 items). Invitees bid on items posted by your executor, with allotted credits.

Over the past few decades, the tone of funerals has shifted. "It used to be an event where we came to mourn," says Rick Noel, manager of Walton's Chapel of the Valley funeral home, in Carson City, Nev. "Now it's an event where we come to celebrate a life." You can personalize your "party" by leaving your family with photographs, music and objects that reflect your interests to include in a service.

And you're not limited to the usual ideas. A fire truck carried one of Noel's clients, a firefighter, from the church to the cemetery. Another man, who collected antique cars, made his last road trip in a procession of them. In lieu of a viewing, you could request that your friends and family commemorate your life at a place you love -- say, a restaurant, a beach or a park. Most states don't require you to use a funeral home's services.

Don't let your carefully laid plans go to waste. If you include them in your will, your survivors may not see the instructions until it's too late because they may not be able to get the will from your lawyer or safe-deposit box in time. Make a separate list detailing your funeral and burial wishes, and give copies to your family. Or for $12, buy a fill-in-the-blank booklet from the Funeral Consumers Alliance, which includes a checklist of legal documents plus templates for advance medical directives.

Choosing cremation could save money, depending on whether you have a viewing before the cremation and where you want the remains to be interred or scattered. A direct cremation -- one that doesn't include a visitation or funeral service -- typically runs $1,500 to $1,800. You can spare your family some headaches by signing a legal authorization for your cremation in advance. Otherwise, depending on your state's laws, each of your children may have to give consent for cremation, which could be a hassle if your family members are spread across the country or disagree about whether you should be cremated.

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The late Jane Bennett Clark, who passed away in March 2017, covered all facets of retirement and wrote a bimonthly column that took a fresh, sometimes provocative look at ways to approach life after a career. She also oversaw the annual Kiplinger rankings for best values in public and private colleges and universities and spearheaded the annual "Best Cities" feature. Clark graduated from Northwestern University.