Although often overlooked, estate planning is one of the most important steps you can take to make sure loved ones are taken care of and your final healthcare and property wishes are handled as you wish. A little extra effort today will give you and your family peace of mind going forward. While the following is not a comprehensive list of everything involved in estate planning, it should help you get started.

1. Write (and Sign) a Will

This is the single most obvious aspect of estate planning, but based on statistics, you would hardly think so. According to a 2016 poll conducted by Gallup, only 44 percent of Americans have a will. Even the musician Prince, who was unquestionably wealthy, did not have a will at the time of his death, exemplifying the importance of not leaving it too late to get a will. A will ensures that your assets will be left to and divided among the correct heirs. By law, if an individual passes on without signing a will, assets will automatically go to the next closest blood relative. For some that might be perfectly fine, but for others with multiple heirs, a will is absolutely essential for peace of mind. Although every state has its own specific rules, wills require very little to hold up in court. If the document is in writing, signed and dated, and signed by at least two witnesses of sound mind, it should be legally binding. Also, to avoid confusion, it’s important to explicitly state a personal representative to carry out your wishes.

2. Know the Tax Implications

Fulfilling tax obligations after a loved one passes can be an expensive endeavor. In a 2015 study conducted by the Organization for Economic Co-operation and Development, the United States was shown to have the fourth highest estate and inheritance tax rates in the world. Considering your final income taxes are still due the year after your passing, your beneficiaries could be looking at quite a bill — big enough they might have to start liquidating assets to pay it in full. Most households will fall under the $5.49 million federal tax estate exemption, but if you represent one of few households that do (two households per thousand will be affected by federal estate taxes), you must familiarize yourself with ways to minimize — within legal limits — the financial burden on your heirs. Here are a few of the most common means of lawfully reducing your family’s estate tax bill:

  • All property left to your spouse, even if valued over $5.49 million, can be passed on tax-free.
  • If the amount passed on to your spouse is under the $5.49 million exemption, then future heirs (such as the surviving spouse’s children) can claim the unused amount.
  • Any property or other assets left to charity is exempt from the federal estate tax.

Just because your household falls well under the federal estate tax exemption does not necessarily mean your heirs will be exempt from all fees. Depending on where you live, they might also be required to pay an estate or inheritance tax dictated by the state. For a complete list of states with these taxes, click here.

3. Consider A Trust

All wills, regardless of their quality, are required by law to go through a court-supervised probate process to determine legal validity. While it’s often just a formality, it can take time depending on the complexity of the estate. It can also be quite expensive, as court fees, attorney fees, accounting fees, appraisal fees, and other expenses add up. In some cases, the cost of getting through probate can be as high as eight percent of your total assets before taxes. To avoid this, in addition to a will, many households opt to house the majority of their financial assets in a trust. In a trust, you do not “own” your assets in a legal sense — you only are authorized to use them as if you owned them. When you pass on, your trust lives on as a legal entity. Therefore, the assets housed in it will not be subject to the probate process. The laws for setting up a trust vary by state, but to begin, you must appoint and transfer your assets to a “trustee” to invest and distribute them on your behalf. This can be an individual, such as a close friend, or a corporate entity, such as a bank. While setting a trust up is fairly simple in theory, there are dozens of questions to consider regarding how you want the trust to operate. If you wish for your child to receive everything, for example, you can order your trust to spread out the distribution of your assets over a period of time to ensure they don’t spend it all at once. You can also set aside funds to be used for specific purposes, such as college tuition. If a trust sounds like a financial decision that could work to your benefit, hire a good estate planning attorney to help you navigate the process. It might be a good idea for you to check out Estate Planning Lawyers & Elder Law Attorneys to learn more about the legal side of estate planning.

4. Keep a Record of Your Assets in One Place

If nothing else, ensure that when the time comes for your family to take inventory of your assets, they can easily locate them. This goes far beyond tangible assets. If you have multiple bank accounts, compile all of the account numbers, passwords, keys, and any other relevant information required to access them. Estate planning, at its core, means making complicated decisions today to protect your family in the long term — but it also means giving yourself peace of mind in the short term.