Step 8: Plan Your Estate

ESTATE PLANNING can involve all kinds of legal documents and complicated strategies. But three simple steps are essential: We should make sure we have a will, the right beneficiaries named on our life insurance and the right beneficiaries listed on our retirement accounts. Naming the right folks on our retirement accounts is especially important, because there’s a good chance these accounts hold the bulk of our wealth.

These aren’t one-and-done decisions. For instance, we’ll want to revise our will if we move to another state, get married or have children. Getting married should also prompt folks to revisit the beneficiary designations on their retirement accounts and any life insurance.

As we grow older, we’ll likely want to make further changes to our estate plan, including drawing up powers of attorney, writing a letter of last instructions and perhaps setting up various trust arrangements. We should also ponder whether we can afford to give away money now—not just to family members, but also to our favorite charities.

On top of these key legal steps, probably the greatest gift we can leave behind is a simple, well-organized financial life. Even better: We should take the time to explain to our family where key documents can be found, what we own—and who’ll get what and why.

Next: Step 9: Make Projections

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