Have you taken these key estate planning steps?
Do you ever think about what you’ll leave behind for your family or loved ones? If so, you’ve taken the first step in estate planning. It's an important step for everyone, even if you don’t think you have enough assets for it to apply to you.
What is estate planning?
Your estate refers to the sum total of your finances, which includes property and real estate, money in the bank, cash value you’ve built in a whole life insurance policy, stocks and bonds, retirement accounts, financial assets, and possessions — basically anything that remains after you account for unpaid loans. Estate planning is a type of financial strategy that makes sure your assets are distributed how you want them to be after you pass away. To make sure your estate is in order and your heirs are taken care of, make sure you have a will, a living will, power of attorney documents, and life insurance.
Create a will
Put simply, your will is the document that captures what you want done with your money and possessions after you die. It should lay out who gets the house, the investments, personal possessions, and everything else you hold dear. Not many people have a will though. A Caring.com survey found only 24% of Americans have a will.1 Unfortunately, not leaving a will behind is almost always bound to create issues for your survivors, at an already stressful time. Without a will that sets out your choices, the state in which you live will make all the decisions. Your estate will be subject to federal and state taxes, and handling your affairs could take months. Use an estate lawyer — who is licensed within your state — to ensure it gets done right.
Create your living will and power of attorney documents
A living will, sometimes also called an advance directive, spells out your wishes about end-of-life care. For example, how long would you want to stay on life support?
A power of attorney is a document that sets out who can make financial or medical decisions on your behalf in the event that you become incapacitated. For example, deciding on your medical treatments, paying your bills, or managing your property while you are alive but unable to take care of these things on your own.
Deciding what’s going to happen if you’re medically unable to make decisions on your own is an important role that is given to someone called your “agent.” By law, an agent acting with power of attorney has to maintain neutrality and act in your best interest. Set up a living will and power of attorney documents to appoint at least one backup agent to make financial and medical decisions for you if you’re unable to. Life support decisions and funeral arrangements are some of the issues that fit into this category.
Help your heirs with life insurance
A whole life insurance policy is a form of what’s known as permanent life insurance and will accumulate cash value.2 The cash value is money that you can use during your lifetime. It also guarantees a certain amount of money will be left to your heirs.3
You could consider transferring your whole life insurance policy, with its cash value, into a trust, which might create tax or legal advantages for your chosen beneficiaries.4 You can also gift money tax-free to pay for a whole life insurance policy on the life of your beneficiary, to ensure they’re financially secure when you’re gone. When your beneficiary is an adult, they can take over the responsibility of paying for the whole life policy to grow their cash value asset and create a legacy of their own.
Start planning now
You might feel you still have your whole life ahead of you, especially if you’ve experienced some early financial successes. Or maybe the priority right now is building an estate, but you’re not thinking about ensuring its long-term viability. If it’s helpful for you while you focus on nearer-term goals, look at estate planning as part of a strategy to create a powerful “future spending engine.” Planning forward can also help you meet important goals such as:
- Funding your children’s and grandchildren’s education.
- Providing ongoing care for elderly relatives or a special needs child.
- Supporting your favorite charities, non-profits, or arts organizations.
Update your records every few years
Most estate attorneys will advise you to check back with them every few years, if not annually. This is because family dynamics can change, as can federal and state laws, affecting the way you leave gifts or decide upon beneficiaries.
Record current account numbers, life insurance statements, financial assets, safety deposit boxes (remember to include both the box number and the address of the financial institution), and your electronic passwords in one secure place. Make sure your appointed agents and other important parties know each other’s contact information, and also where your essential information is held.
Get help
I can offer you a variety of choices for leaving a legacy. Some courses of action may offer advantages from the standpoint of how much money your heirs inherit, or the timing of decisions they need to take after you pass away, particularly in paying estate taxes.
Many Americans put off estate planning. According to Caring.com’s survey, more than 40% of Americans said they haven’t started estate planning because they, “haven’t gotten around to it.”5 But families who never find the “extra time” may suffer serious financial and emotional consequences should a family member pass away without a will.
So don’t stall on your estate planning — the sooner you start the more confident you’ll feel about the future.
Disclaimer
Guardian®, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
Brought to you by The Guardian Network © 2025. The Guardian Life Insurance Company of America®, New York, NY
1 Victoria Lurie, 2025 Wills and Estate Planning Study, Caring.com, February 18, 2025, https://www.caring.com/caregivers/estate-planning/wills-survey/
2 Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.
3 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 and a half ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.
4 All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.
5 Victoria Lurie, 2025 Wills and Estate Planning Study, Caring.com, February 18, 2025, https://www.caring.com/caregivers/estate-planning/wills-survey/
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