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Estate Planning

Estate Planning

Perhaps you have heard the now-famous phrase, “The only two certainties in life are death and taxes,” originally attributed to founding father Ben Franklin (by the author Mark Twain). Estates and estate planning incorporate death and taxes, with a good dose of law thrown to make it interesting (and complicated).

What is Estate Planning?

As defined by common law, your estate is your net worth at a given point in time (meaning, all of your current assets minus any liabilities). Estate planning is an umbrella term encompassing all the major financial and life planning decisions one must make to determine the fate of his or her assets upon death or incapacity.

An estate plan also determines the estate's impact on any dependent children you might have designated in your will, and establishes your wishes for medical care. An estate plan can also help simplify the probate process and maximize the amount you can pass on to your heirs.

What kinds of assets are in an estate?

Common assets on the “plus side” could include real estate (both your primary residence, any second or vacation homes, and any rental properties), automobiles, cash, savings, retirement accounts, health savings accounts, stocks, bonds, ETFs, life insurance policies, valuable artwork, and pensions. Of course, your assets may be different. Ownership in a business is also an asset.

The “minus side” would include any debt, such as credit card debt, mortgages, auto loans, liens on any property, current income taxes owed, etc.

Understanding Estate Planning

You do not need to have a deep understanding of estate law or be an attorney to grasp the critical parts of a well-designed estate plan. You should, however, consider consulting with an attorney when you are ready to set up your estate plan, especially if you have a large or complicated estate or special child care concerns.

Hiring an attorney is generally worth it. They address and resolve all kinds of different situations you might not be aware of to ensure that your estate plan is correct. An attorney will also strive to maximize the benefits for your beneficiaries while minimizing the taxes owed on the estate (remember, it’s about death and taxes). Estate taxes, gift taxes, income taxes, and other related taxes may all come in to play when your estate is settled.

A basic estate plan involves most or all of the following components:

  1. A personalized will
  2. Trust account(s)
  3. The name of the Executor of the estate
  4. The legal guardians for any dependents
  5. The Durable (or Limited) Financial Power of Attorney
  6. Advance Health Care Directive: Medical Care Directive (also called a Living Will) and name of the Medical Power of Attorney (also called a Health Care Proxy)
  7. Funeral, memorial, and cremation arrangements
  8. Charitable gifts and instructions, if applicable

Where to Start

Now that you have a basic understanding of what estate planning covers, the perfect place to start is to write your will if you do not have one. Everyone needs to have a will (called a Last Will and Testament), even if you have few assets or decide you do not need any further estate planning.

Why is having a will so important?

A will is a legal document that directs your assets in the right amounts to the correct people (or institutions). If you have dependents, it also names the legal guardian for your minor children and the kind of care you want for them to have. Even if you have a will already, you will want to review it every time you experience a significant life change, such as buying or selling a house, having a child, or getting married or divorced.

What if I can’t afford a lawyer?

The good news is you may not have to hire a lawyer in some cases. There are several good online resources for writing your own will if your estate is small or not very complicated.

TIP: Be sure to check the beneficiary status on all your accounts, including retirement accounts and checking and savings accounts. The person you name as the beneficiary is the person you want to inherit the account. Remember, the beneficiary cannot see the balance of your account unless they are a cosigner on that account.

What about my medical care needs?

A complete estate plan establishes not only your wishes for your assets after death but also sets up any medical care you might need while alive, if you become incapacitated to the point that you are unable to make decisions on your own. An Advance Care Directive (or Living Will) outlines these medical care wishes and includes naming a trusted family member or friend to carry out those wishes.

TIP: It is a great idea to set up an Advance Health Care Directive and name a Medical Power of Attorney (Health Care Proxy) while you are alive and well and can think through what you would want if you cannot take care of yourself or make healthcare decisions.


  • Writing and having an up-to-date will is the best place to start if you do not have one already. A will is an essential legal document if you have dependent children and are looking to provide an inheritance.
  • A thorough estate plan minimizes taxes and maximizes the financial benefits to your beneficiaries. An estate plan can also shorten or lessen the adverse effects of the probate process.
  • Setting up an Advance Health Care Directive is an important step. The directive should spell out your medical care wishes if incapacitated and a trusted person who can carry out those wishes.
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