A recent study shows only four out of every 10 American adults have an estate plan, including a will or trust to distribute their assets when they die. That low percentage has a lot to do with misconceptions over estate planning.

First, you don’t have to be rich or even own your home. The goal is to distribute your assets according to your wishes and select someone you trust to make medical or financial decisions for you if you die or become incapacitated.

Estate planning checklist

Other goals are choosing beneficiaries and reducing tax liabilities for your estate both while you are still alive and when transferring your assets. To get started, take these steps:

Document all assets: Some people may not think they have enough property to justify creating an estate plan. However, many are surprised when they take inventory of their tangible assets, such as:

  • House and other real estate
  • Cars, boats, or motorcycles
  • Artwork or other collectible items
  • Other possessions, such as jewelry

Intangible assets include:

  • Financial accounts, such as checking, savings and certificates of deposit (CDs)
  • Retirement plans, including 401(k)s, pensions and IRAs
  • Life insurance policies
  • Business holdings

After documenting these items, estimate their value or get them appraised.

Cover your family’s needs: Once you have an idea of what you own and how much it is worth, think about protecting these assets and your family by:

  • Determining whether you have enough life insurance in place
  • Naming a guardian for minor children
  • Clearly stating your wishes for children’s care

Establish directives: A complete estate plan contains these vital legal documents:

  • Living trust
  • Medical care directive
  • Durable financial power of attorney
  • Limited power of attorney

Selecting people you trust for power of attorney is crucial as they literally have your medical and financial well-being in their hands.

Review beneficiaries: Make sure the right people are getting your assets, and note that some are not included in your estate plan, such as:

  • Insurance and retirement accounts often have separate beneficiary designations
  • Name contingency beneficiaries in case primary beneficiaries die before you do

Understand state and federal estate tax laws: One of the primary goals of estate planning is to avoid taxes. Estate taxes apply for assets transferred after death. Both federal and state exemptions exist, meaning no taxes apply for amounts under:

  • $11.58 million for federal estate taxes
  • $3 million for Minnesota estate taxes

Be cautious about do-it-yourself estate planning

Following this checklist helps you prepare for putting an estate plan in place. However, consulting an experienced estate planning attorney is crucial to ensure your plan meets your goals for distributing as much of your assets as possible with the least financial impact to your estate and your beneficiaries.