The Comprehensive Guide to Estate Planning

guide to estate planning

An estate plan doesn’t materialize with the snap of your fingers. In fact, an estate plan demands that you confront your mortality. Perhaps that’s why so many of us fail to plan for the future. The reality is that estate planning isn’t about you – it’s about your loved ones.

Much stands to be gained, or lost, with this important tool.

If you think you don’t need even the most basic estate planning vehicle, i.e., a will, think again.

In this comprehensive estate planning guide, we give you an overview of the estate planning process, the estate planning tools you should consider, what it’s like to work with an estate planning attorney, how to get started and more.

Article Contents

Estate Planning Definition

Despite the presumed grandeur of the phrase, estate planning, simply put, is outlining who gets what when you die, as well as how your affairs should be handled if you’re incapacitated and who should execute your wishes.

Who Needs an Estate Plan?

Estate planning is often misunderstood as being only for the wealthy. If you have an income, a car, a home, investments, a bank account or a combination of these things, you have an estate – and you need an estate plan.

Despite the need, only one-third of Americans say they have an estate planning document, according to a 2020 survey from, an online resource for caregivers. That’s down 25% from the same survey in 2017.

The ramifications of avoiding this important area can be monumental and the benefits vast.

Dividing assets without the guidance of a legal document often causes significant strife within families, for one. Who is responsible for selling your home? What if your son wants to move in, while your daughter prefers a Zillow listing? Who receives your valuable family heirlooms and sentimental keepsakes? Who’s driving away in your car? Who’s taking ownership of your lake house? These disputes can lead to costly, drawn-out legal battles, draining your loved ones of time, money and emotion.

Beyond that, you also risk leaving your assets to unintended beneficiaries. In some states, for example, if you are married at the time of death and died without a will, your spouse would not receive all of your assets if you have children.

And without an estate plan – even if your loved ones can divvy up your property without disagreement – your assets can get tied up in probate, a time-consuming public court process.

Estate Planning Goals

An estate plan can help you accomplish the following goals:

  • Name the family members, loved ones and organizations or groups you want to receive your property following your death.
  • Transfer your property expediently, with as few legal hurdles as possible.
  • Name the person or institution – ideally a fiduciary who is obligated to act in your best interest – that can act as your proxy, settle your estate and distribute your assets.
  • Outline the type of medical care you do or do not wish to receive should you become incapacitated.
  • Express your wishes and preferences for funeral arrangements and how related expenses will be paid.
  • Minimize or eliminate estate taxes.

Wills and trusts are the two primary estate-planning vehicles that can help accomplish these goals. While a will is an important planning tool in distributing your assets, it is not designed to offer certain additional protections that are available under a trust.

Estate Planning and Wills

If you die without a will, you’ve assumed the government knows best. Everything you own will be distributed based on state statutes. But the law doesn’t know you, your loved ones, your values or your wishes.

A will puts you in the driver’s seat and eases the burden on your loved ones during what is already a difficult time.

What is a Will?

A will is a legal document that spells out who will receive your property upon your death. But several other benefits come with establishing a will that go beyond that primary function.

Other Possible Functions of a Valid, Up-to-Date Will:

  • Potentially reduce unnecessary legal fees. Reducing legal fees can help protect the value of the property and assets passed to your beneficiaries.
  • Expedite the legal process. It is faster, and generally less stressful, to settle an estate with a valid will in place. It can be the difference between settling the estate in a few months or extending the process beyond a year.
  • Appoint an executor. An executor oversees and manages the distribution of your estate. It’s not a responsibility to take lightly. Designating a trustworthy and impartial executor provides peace of mind that the terms of your will and your wishes will be honored. If you don’t have a will, the state will appoint your executor.
  • Appoint a guardian for minor children. In the event of the death of both parents, a will can determine the care of minor children.
  • Help reduce confusion among loved ones. An up-to-date will that clearly outlines how you want your property to be distributed leaves less room for family disagreements that could arise when your loved ones are left to figure it out for themselves.

Wills and the Probate Process

An estate distributed by a will must go through the probate process. Probate is a public court process governed by the state that accepts the will as a valid legal document. Assets including cash, real estate and personal property are subject to the probate process, which can be time-consuming and expensive. You can potentially avoid probate through a trust as well as through assets with beneficiary designations, such as those listed on your 401(k); an estate planning attorney can help you determine the right path in that process.

Estate Planning Tools to Pair With Your Will

Because wills aren’t an all-encompassing estate planning vehicle, it’s important to consider additional planning documents that address how your estate and/or health care is managed if you are alive but unable to make decisions, often due to injury or illness.

These important legal documents that work in conjunction with a will include:

General power of attorney (POA) is perhaps the most important legal document you should consider, even above a will. If something happens to you, and you can no longer manage your affairs – think paying your bills – you need someone to step in who has the legal authority to act on your behalf. That can only be done if you have a power of attorney.

The powers granted in a POA also include handling financial and business transactions, buying life insurance, settling claims, operating business interests, making gifts and employing professional help.

A general power of attorney is also an effective tool if you will be out of the country and need someone to handle certain matters.

Durable power of attorney has a durability provision to keep the current power of attorney in effect. Many people rely on a durable power of attorney to prepare for the possibility that they may become incapacitated due to illness or injury. The Durable POA might specify that it cannot go into effect until a doctor certifies the grantor as incapacitated.

Financial power of attorney gives a person the authority to manage financial and legal matters. It may be granted for a limited time or for specified circumstances only.

A living will, also known as a directive to physicians or advance directive, is a document in which you state your wishes for end-of-life medical care in the event that you are unable to participate in decisions.

Healthcare power of attorney is a type of advance directive in which you name a person to make healthcare decisions for you when you are unable to do so. Sometimes this is called a durable power of attorney for healthcare or a healthcare proxy.

Estate Planning and Trusts

While a will can determine who may receive your assets outright, trusts act as a more customized, all-encompassing, multi-purpose planning tool that can also help beneficiaries avoid the cost and hassle that comes with probate.

What is a Trust?

Under a trust, instructions dictate exactly how and when to pass assets to beneficiaries. This can be very important when beneficiaries are minors, or if you want to outline specific parameters on the amount of assets that adult beneficiaries can access over some time. For example, maybe you want your grandchild to finish college before inheriting the property you reserved for them or you want to control how much money your son, the spendthrift, can access after your death.

Unlike a will, a trust includes an incapacity clause that states who you want to manage your affairs if you experience a significant medical issue that interferes with your ability to make decisions.

For most people, the primary objective in establishing a trust is to help ensure assets are protected, managed and distributed in accordance with their wishes when they are no longer able to make decisions due to incapacity or death.

Benefits of a Trust

  • Properly funded trusts can avoid probate. In many states, the probate process is slow and expensive – and public.
  • Trusts can offer protection from creditors. Holding assets in a trust can help protect that inheritance against potential losses.
  • Trusts protect family members who are not accustomed to dealing with financial matters.
  • Trusts can offer certain protections in the event of divorce, as trusts are not considered marital property, or other litigation.
  • Trusts can provide support for spouses and children, which is particularly helpful for blended families.
  • Trusts offer better protections to same-sex couples and cohabitating partners, relationships that might not be recognized the same way by state law, depending on where you live.
  • Trusts can help ensure that funding is available for specific needs, such as education, health care or charitable causes.

Types of Trusts

All trust types fall into one of two categories: revocable trusts and irrevocable trusts. These serve different purposes, with their own benefits and drawbacks.

A Revocable Trust

A revocable trust, also called a living trust, can be modified or terminated during your lifetime. Any earnings generated by assets held in trust are reflected on your income tax returns.

You can manage the financial assets in the trust or hire a financial advisor to manage your assets following trust provisions.

A revocable trust, like a will, can also be used to transfer assets at death. Once you die, your wishes are final and the trust becomes irrevocable. Your assets are then managed and distributed by your trustee, in accordance with the instructions outlined in the trust.

An Irrevocable Trust

As a general rule, an irrevocable trust cannot be modified or terminated – before or after your death – without involving the court and/or hiring an attorney to determine other legal pathways in your state that might allow you to make changes.

In most cases, an irrevocable trust is a separate legal entity and its own taxpayer.

Irrevocable trusts are often created before death to move assets out of someone’s estate that might be subject to estate tax. They are often used to hold life insurance policies, gifts of assets to beneficiaries at a future date or funds for future charitable donations.

Common Trusts

Survivor’s Trusts are created by an individual during their lifetime to provide for a surviving spouse, domestic partner or other loved one(s).

Guardianship Trusts are established to protect and handle the assets of minors.

Generation-Skipping Trusts, or Dynasty Trusts, provide distributions for the benefit of a child for life, with the remainder continuing on to grandchildren, or more remote descendants.

Special Needs Trusts are established to ensure any supplemental or living expenses are paid through a disabled person’s lifetime that are not paid by other sources.

Charitable Remainder Trusts are irrevocable trusts. Income is paid to designated beneficiaries for a certain term or lifetime. The remainder interest is paid to qualified organizations as specified in the document.

Private Foundations are charitable organizations created and funded by a donor as a trust or a non-profit organization.

Irrevocable Life Insurance Trusts or ILITs may be used to shelter an insurance death benefit from estate taxes and may provide liquidity to pay estate taxes, settlement costs and/or equalize distributions among beneficiaries.

Credit Shelter Trusts allow married couples, who may have to pay estate taxes, to reduce those taxes by taking full advantage of state and federal estate tax exemptions.

Estate Planning and Your Legacy

Estate planning can and should go beyond who gets what. It’s important to consider your core values, your belief system, what you want to pass on to not just your loved ones but to your community. What’s important to you? How do you want to be remembered? What legacy do you want to leave?

For many, this is where charitable giving comes into play. No matter the size of your estate, if your heart is in certain causes, you can decide to give to those causes upon your death.

When it comes to philanthropic planning, we should give in a way that makes the most impact. For example, giving $100 to 1,000 organizations likely is not as impactful as giving $100,000 to one organization you are passionate about.

A financial advisor can help you determine what organizations and charitable giving vehicles align with your values. They can help you calculate a plan to donate to important causes in a way that maximizes your generosity and offers you and your beneficiaries the greatest tax benefits.

Philanthropic Giving and Your Estate Plan

With charitable remainder trusts, donor-advised funds and private foundations, you can plan and honor your legacy.

Charitable Remainder Trusts are a tax-efficient tool that enable you to give to important causes while also sheltering your beneficiaries from capital gains tax for a certain term of years. Every year of your beneficiaries’ lives, they are paid an annuity from your CRT, giving them consistent income over several years. The “remainder” goes to charity, typically 40-60% of the trust’s value but as little as 10%. Under this trust, you can leave a legacy of giving that models values for your children and grandchildren.

Donor-Advised Funds preserve your funds for charitable causes while potentially reducing tax liability. The fastest growing charitable tool, a DAF is run by 501(c)(3) organizations that invest the donations and manage the account. You can name your DAF as a primary or secondary beneficiary in keeping with your legacy plan. Retirement assets left to charity, including via donor-advised funds, are protected from taxes, so your distributions can make a bigger impact on the causes you care about. In addition, your children can take over some DAFs when you are no longer here or able to manage the fund.

Other philanthropic planning strategies can include qualified charitable distributions (QCDs) and private foundations, both of which are vehicles to exercise your generous impulses with their own benefits and restrictions. Your financial advisor and estate planning attorney can walk you through these options and what best aligns with your goals.

Carson Private Client provides sophisticated solutions to high net worth individuals and families. Request a consultation to explore the luxury and benefits of Carson Private Client.

Do I Need an Estate Planning Attorney?

For most people, hiring an estate planning attorney makes the most sense.

Estate plans can get complex fast, and even fairly straightforward estates can feel overwhelming if you’re not trained in the area. Working with an estate planning attorney can take the pressure off you.

Estate planning attorneys have extensive knowledge of state statutes. It’s their job to stay on top of the law as it changes and make sure your estate plan is in compliance.

Estate planning attorneys have considerable experience in the field, understanding every angle and every question you should consider. There is much you can do to make sure your loved ones are well cared for. Working with a professional can give you the confidence that your plan is in line with your goals and wishes.

Online Estate Planning Services

Online will-creation services are becoming more popular, and while they are typically a less expensive option for those with straightforward estates, that comes at a cost. Online services usually offer a fill-in-the-blank approach. The key to an estate plan is customization and peace of mind. The limitations inherent in online services will make that difficult.

An estate planning attorney, on the other hand, will work with you to understand you and your family’s specific needs, asking questions and offering solutions that align with your specific circumstances and goals. They also verify accuracy, ensure the plan complies with the law and can work with your financial advisor to confirm your will coordinates with your financial accounts, your savings plan and legacy wishes.

How to Find an Estate Planning Attorney

You’ve wisely decided to work with an estate planning attorney, but now you’re in the business of finding and selecting one. Follow these guidelines to choose an attorney that’s the right fit for you as you plan your legacy.

Take advantage of employee benefits. Some employers offer legal services to their stakeholders, so start by checking with your company’s human resources department to see if such an offering is available to you. Similar to an insurance plan, your employer’s legal services might give you access to an attorney and/or cover certain fees and expenses associated with establishing a will.

Word of mouth is your friend. Talk to your trusted friends, family and coworkers for recommendations. Turn to the other professionals you work with – think your financial advisor, accountant and insurance agent – for their input. You can also turn to your local estate planning council or bar association for guidance. Then research online and read reviews.

If you come across an attorney’s website that claims they practice in all areas of law, dig deeper. Though a firm might cover many areas of law, your estate planning attorney should be highly specialized. State and national laws are constantly changing and you want to work with someone who is regularly dealing in that area of legislation.

Set up a first meeting. Many attorneys offer complimentary consultations, so you can gauge if you’re a good fit. Take advantage of this opportunity. At the consultation, whether it be in person or over the phone, be sure to ask questions:

  • What does the planning process and timeline look like?
  • Will I work with you exclusively on my estate plan or other members of your team at any point?
  • What are your fees?
  • What if I have questions about my estate plan during or after its creation?
  • Do you execute the estate plan?
  • What is your experience in estate tax planning?
  • What do I need to do to prepare for our next meeting?

The purpose of this consult is for the attorney to suss out your needs and for you to understand the planning process and logistics and determine your comfort level with the firm. Do not expect to walk away from this meeting with specific advice – their expertise is not free.

After you meet the attorney, ask yourself these questions:

  • Did I feel at ease during our meeting?
  • Would I feel comfortable discussing sensitive and personal issues with them?
  • Did they answer my questions to my satisfaction?
  • How efficiently did they communicate?
  • If they said they would follow up with me, did they?

You should feel confident and comfortable in your relationship with your estate planning attorney. If you’re not, keep looking for a better fit.

During the consultation period or after you have hired an estate planning attorney, you will likely fill out a questionnaire that assesses your needs. The topics addressed in the questionnaire might include but are not limited to:

  • Retirement or pension plans
  • Assets (Real estate, cash, investments, valuable property such as vehicles, etc.)
  • Business interests
  • Debt/liabilities
  • Beneficiaries who require special care
  • Previous marriages and prenuptial agreements
  • Preexisting wills or trusts
  • Life insurance policies
  • Anticipated inheritance, gifts or settlements

Estate Planning Costs

Your estate planning attorney’s fees will depend on their experience level and the complexity of your situation and the services you require.

While some attorneys will charge a flat fee for certain services – expect to spend at least $500 for a basic will, for example. Others will charge per hour. Some might combine the two fee scales, charging a flat fee for more basic services and charging per hour for anything beyond that.

If an attorney charges you a flat fee, know that they’re simply calculating their hourly rate by the number of hours they expect to spend on your case based on your consult. This can help you compare rates among attorneys who use different fee structures.

When analyzing multiple attorneys’ fees, make sure you’re considering the differences in their experience and in the services they’re offering you to get a more accurate picture and a fair comparison. Remember, your goal shouldn’t be to find the least expensive attorney; your goal should be to find an attorney with the right experience and expertise to put together a thorough, legitimate estate plan that brings you peace of mind.

How to Create Your Estate Plan

On a basic level, if you have an estate plan, you control who will receive your property upon your death. An estate plan can also protect you in the event of an unforeseen life-altering medical emergency. It can protect your beneficiaries’ inheritance from losses, their time, their privacy and their peace of mind. It can help you give to important causes and even leave a lasting legacy.

Most Americans need an estate plan of some kind, and most Americans don’t have one. If you’re not sure where to get started, use this checklist as you take the important step in creating an estate plan.

1. Take stock of what you own.

  • Do you own a home, a vacation rental, land or other property?
  • Do you own any vehicles, motorcycles or boats?
  • Do you own any valuable personal items, including antiques, jewelry or fine art?
  • Do you have a checking and savings account?
  • Do you have a retirement account?
  • Do you have any investments, including stocks, bonds and mutual funds?
  • Do you have life insurance policies?
  • Do you have a health savings account?
  • Do you have any business interests?

If you answered yes to any of these questions, gather relevant documents that express their value so you can outline what property you can distribute in an estate plan.

2. Compare your estate planning options, namely wills and trusts.

While a will can determine who will receive your assets outright, a trust gives you the opportunity to decide how and over what time period or at what age your property or assets may be distributed to your beneficiaries.

Unlike a will, a trust can also include an incapacity clause stating who you want to manage your affairs in the event you are unable to. Whether you opt for a trust or a will, it’s important to have a durable power of attorney and health directive to help address those issues.

3. Identify your beneficiaries.

Most people transfer wealth to the next generation and immediate family, but your beneficiaries could also include grandchildren, nieces, nephews, godchildren, a lifelong friend, or others.

It’s important to consider whether your beneficiaries share the same values as you. Do they have the financial knowledge to responsibly handle an inheritance? How well do they manage their own finances? What are their attitudes toward saving, spending and investing? These questions can help guide your decision-making process.

If you choose to pass all or parts of your wealth directly to grandchildren or other minors, it’s important to be aware of certain limitations that come with that decision. Most insurance policies, retirement accounts and investment accounts will not directly transfer to a minor who is named as a beneficiary. Instead, those accounts need to be received by a court-approved guardian or trust. That’s because laws prevent anyone under age 18 from receiving large lump sums.

Multigenerational wealth planning is an area that your financial advisor is well-equipped to address. Set up an appointment to receive valuable advice and guidance regarding minor beneficiaries.

4. Outline your wishes for your funeral and end-of-life and medical care if you are incapacitated.

Planning a funeral and making life-or-death decisions about your loved ones are both incredibly fraught and emotional processes. You can spare your family that difficulty.

Plan your funeral – and even pay for it in advance – to relieve that burden. You can be as detailed as you like to make sure your wishes are carried out.

Similarly, you should determine how your affairs should be managed, including health care decisions, if you’re not able to do so because you are incapacitated.

5. Find an estate planning attorney.

Even fairly simple estates can feel overwhelming if planning isn’t your specialty, and of course the more complex cases come with their own headaches. Working with an estate planning attorney can take the pressure off you and give you confidence that your plan will take care of your loved ones, as you designed it.

An estate planning attorney will customize your plan to your needs, ensure the plan complies with the law and can work with your financial advisor to confirm your will coordinates with your financial accounts, your savings plan and legacy wishes.

6. Routinely revisit your estate plan.

You cannot set and forget your estate plan. It’s important to review your plan periodically. State statutes could change, and so could your life circumstances. For a fee, some estate planning attorneys will review your estate plan every six to 12 months. If you’re not interested in this option, plan to check in every three to five years and after these triggering events:

  • Marriage
  • Divorce
  • Buy or sell a home
  • Birth of children
  • Birth of grandchildren
  • Adult child facing divorce
  • Change in employment
  • Change in physical or mental health in you and/or a loved one

7. Work with a financial advisor.

Your financial advisor can help you begin the estate planning conversation in a way that makes sense for you and your loved ones. They know your holdings, and they also understand your goals and values – armed with that knowledge, they can help you shape a legacy that cares for the people and causes you love.

Your advisor at Carson will make sure your financial and estate plans are in sync and can help you address commonly overlooked items that can create risks and complications for your loved ones. Collaboration is key to making sure everyone involved in the planning process is on the same page and doing their best work to serve your needs.

Your advisor can also hold you accountable. It’s not uncommon to start the estate planning process and lose focus. Some people do all but sign their plan. Let your advisor get you across the finish line and one step closer to peace of mind.

Want more pointed guidance and an experienced planning partner? Reach out to schedule a consultation or set up an appointment with your advisor today.

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