Estate Planning Guide

End-of-life planning isn’t exactly fun. While the topic may seem sad and scary, estate planning is crucial to protect your assets and family after you pass.

Just because estate planning is important doesn’t mean everyone is thinking about it. Caring.com’s 2024 Wills and Estate Planning Study shows that 2 out of 3 Americans are unprepared for the inevitable, with only 32% of U.S. adults currently having estate planning documents such as a will or living trust.

Estate planning doesn’t have to be difficult or upsetting, and the sooner you get started, the more empowered you and your family will be. The benefits of early planning are significant, and this guide is here to help you get started.

 

In estate planning, someone specifies how their money, property, and other assets should be managed after they pass or become incapacitated. Estate planning can also specify pet care and care for any dependents. Estate documents can also include directions for the type of medical care they want to receive if they cannot communicate those wishes directly and their final arrangements.

Wills and estate planning are essential. Without a will, decisions about your medical care, property, and final arrangements will be made without your input. The plans these decision-makers choose may not match the wishes of the deceased or incapacitated person. 

Consider the following key questions before deciding which documents to include in your estate plan. 

• What are my assets, and what is their approximate value?
• What people or organizations do I want to have these assets, and do I wish to give them away during my lifetime or after my death?
• Who should manage these assets during my lifetime if I become unable to do so, or after my death if management is needed?
• Who should care for any minor or dependent children and pets?
• Who should make decisions about my medical care and finances if I cannot make them?
• What do I want to happen to my remains after I die?

The above questions will help you determine your estate's complexity, making it easier to know which estate planning documents you need to protect your assets, loved ones, and yourself. The most common documents you’ll need to consider are: 

• Wills
• Trusts
• Financial and Health Care Powers of Attorney
• Advance Health Care Directives 
• Guardianship Designations 
• Final Arrangements

Wills are the most common and essential type of estate planning document. In a will, you can specify your wishes for property, assets, guardianship of children and pets, and debts. 

However, wills are often not sufficient for those who have very high net worths or own property worth several millions, want to specify successive ownership of property (i.e., who should own it after the initial beneficiary passes), have complicated family relationships, or any other number of complex situations. If you encounter any of these more complicated scenarios, you’ll likely need other estate planning documents besides your will. 

 

Similar to a will, trusts are legal documents that allow you to ensure your assets are distributed to your chosen beneficiaries. They allow for more customization and detail than a will. However, setting up a trust can be more complicated, as you’ll have to transfer ownership of your assets into the trust account for it to be valid. 

A financial power of attorney (POA) allows you to designate someone to handle all of your financial affairs and decisions if you become unable to do so. This inability could be due to illness, cognitive decline, or any other form of incapacitation. Similarly, a health care POA is someone you choose to make medical decisions for you if you are unable to do so.

Setting up a POA ensures that you have someone you trust who is ready to make important decisions and respect your wishes if you cannot make the decisions yourself. Without a POA, these decisions may be made by people who do not know or respect your wishes. 

In an advance health care directive, you can specify your wishes for any medical care you may need after you become incapacitated. You may also specify your health care POA in this document. Combined, an advanced health care directive with a health care POA ensures that your medical treatment continues to follow your preferences even if you cannot advocate for yourself. 

Officially documenting who you’d like to care for any dependents or pets after you pass is crucial. Appointing caretakers in your will ensures your loved ones are well cared for in your absence. 

You can list caretaker information in a will, or in or a separate document via a notarized affidavit. You’ll need to submit this guardianship affidavit to a court for approval. Especially if you do not have a will yet and want to get guardianship designation sorted out as soon as possible. 

In most cases, adding guardianship designations to your will may be straightforward. We highly recommend working with a knowledgeable attorney or estate planning expert to learn which avenue is best for you. 

Part of your advanced planning should include a document stating your wishes for your final arrangements, such as whether you’d like to be buried or cremated (or aquamated), your preferred final resting place, and any wishes for your celebration of life ceremony. You may also name a person to oversee that the stated wishes are carried out as written.

You can include final arrangement information in your will. Still, it’s best to have it documented elsewhere, with someone you trust. Ensure a trusted person understands your wishes for your final arrangements, in case your will ends up in probate. The probate court process can take between 9 to 18 months to resolve, and you likely don’t want to postpone a funeral that long.

Anyone can create a will with a relatively inexpensive online estate planning service. If there are significant assets or a complicated plan for dividing your property, you can pay an attorney to draft your will instead. Expect to pay several thousand dollars in total for attorney services. In either case, it’s money well spent.

When most people think about estate planning, the first type of document that probably comes to mind is a will — and for good reason. Wills are generally the centerpiece of an estate plan, allowing you to direct how your property should be divided and who should get it after you die.

In a will, you can specify:

• What property you wish to leave to family, friends, and organizations
• Who you want to act as guardian and manage property for any dependent children
• Who should act as a personal representative or executor to manage your estate at death, pay debts and taxes, and distribute any remaining property
• Whether you want to cancel any debts still owed to you at death.
• How outstanding debts and taxes should be paid

However, some people require more than a will. You’ll likely need more estate planning documents if you:

• Expect to owe estate taxes when you die, which is most likely if you own property worth several million dollars. 
• Want to have some control over what happens to your property after your death, such as specifying which heirs in future generations gain ownership of the property. 
• Have any children with special needs or disability and want to provide management for property that goes to them.
• Have children from one or more prior marriages who are likely to conflict with a current spouse.
• Fear that someone may claim your will is invalid because they claim you were mentally incompetent or subject to fraud or duress when writing them.

A will is not a one-size-fits-all document, and there are several important factors to consider before you get started, including: 

• Do you want to create your will yourself, use an online will creation service, or work with an attorney? 
• Who do you want to be the executor of your will? 
• Who do you want to be the beneficiary of your assets?
• What assets do you have? 
• Who do you want to assume guardianship of any dependents or pets?

Now that you’ve learned all about your options and have started thinking about how you want to handle your estate, it’s time to take action. Below, we walk you through some basic steps and options for creating your estate plan.

Online will creation services have been around for a while, but even more offerings entered the market when the COVID-19 pandemic created a need for people to turn to virtual and remote solutions for many services, including estate planning. 

There are more quality services than ever, and much like getting your taxes done online, it can be an excellent fit for many people with relatively simple situations. The services are increasingly sophisticated and can handle many more unique situations and circumstances.

This is generally a relatively inexpensive route and provides a lot of value for most families. For more information and reviews of the top services, read our guide to The Best Online Wills Services.

You can also DIY your will, which involves researching the process and creating a will without the help of any services or professionals. While this may end up being better than nothing, there are a lot of risks to creating your own estate planning documents, and it’s much better to get professional help. Every state has its own laws surrounding wills and probate, and if you do the process incorrectly, it could cause numerous headaches and hurdles for your family down the road.

 

Whether you work with an attorney or DIY your will, you must gather some important documents before you begin estate planning. These documents will include any deeds or proof of ownership for assets, including: 

• Property
• Vehicles
• Jewelry
• Furniture
• And any other high-value possessions

You’ll also need documentation for all of the financial accounts you intend to include in your estate plan, including: 

• Checking and personal savings accounts
• Retirement accounts (IRA, 401k)
• Bonds
• Life insurance

Finally, you’ll also want to have documentation of any liabilities, such as mortgages or other debts that must be paid even after you pass.

Hiring an attorney can be great if you have a complex estate or complicated family dynamics. However, given the sensitivity and importance of estate planning, choosing carefully is important. 

Most lawyers offer an hour-long complimentary session to introduce themselves and their services and explain some of the process. Even if you end up paying for that hour, it’s a good investment. An estate attorney will be privy to very personal information about you and your assets, so it’s essential to find someone with whom you find yourself compatible and feel you can trust.

Drawing up a trust or will is an area where experience counts, but that doesn’t mean you need to go to a large national law firm. On the contrary, the most important thing is finding an attorney you trust to keep your interests at heart and with whom you feel comfortable.

Some attorneys bill by the hour, while others charge a flat rate for a package of services. Typical legal fees run several hundreds of dollars an hour. Urban areas will likely have higher rates, and attorneys at larger law firms usually charge more than smaller law firms, although that’s not always the case.

Remember that flat fees aren’t necessarily a better deal than hourly rates, and the priciest lawyer isn’t always the best.

Ask at the outset for the lawyer’s rate. It’s better to know upfront so that neither wastes the other’s time if there’s a huge discrepancy between what an attorney charges and what you’re willing to pay. Generally, the more assets you have, the more complicated your estate will likely be, and the more it will cost to assemble a thoughtful estate plan.

When looking for an estate attorney, the best place to start is to ask your friends, family, and network for firsthand recommendations. If they do not have any or you feel uncomfortable going that route, you can use an online search tool like the one from the National Association of Accredited Estate Planners. Once you’ve identified a few lawyers you’d like to work with, read reviews from past clients and set up a consultation.

If the attorney is a good match in terms of style, pricing, and comfort with risk, be prepared to sign an engagement or retainer agreement that outlines what services they will provide you. In many states, the language in this agreement is mandated by law or the state bar association. 

Before or after the first meeting, your attorney will likely give you some “homework” designed to help identify your goals, raise issues, and gather data on your estate. This should take about half an hour to 90 minutes to fill out.

It’s crucial to complete this form completely and accurately. Whenever possible, gather the names and numbers of the other professionals on your advisory team, including your accountant, life insurance broker, retirement plan advisor, and investment broker. 

Some estate attorneys will charge an extra fee for consulting on how to help minimize estate taxes. You may be subject to the federal estate tax if you have a net worth in the millions (the IRS updates the exact numbers each year). The tax rate scales based on the estate size, but can be up to 40%. 

With some planning, millions can be sheltered from estate taxes. More advanced planning, which may include advice on minimizing or eliminating such taxes by transferring assets to an irrevocable trust, for example, will add to the legal bill. But since it can potentially save your heirs tens of thousands of dollars, most people feel it’s a worthwhile investment.

Some estate plans require more than one draft. For each draft, your attorney should provide a flow chart and summary of what’s contained in the document so that you clearly understand and can provide feedback for changes and updates. 

Read these summary documents carefully and ask questions. If you’re uncomfortable with certain aspects of the plan, ask for them to be changed.

Once the estate plan is finalized, decide who will keep the documents and where. Good lawyers will continue to communicate with clients periodically to remind them of the terms of their will and inquire whether they have any interest in making changes. The lawyers aren’t trying to drum up fees; they simply know that circumstances change and that wills and trusts need modifying. If your lawyer doesn’t do this, you should add “review will” to your own to-do list. 

• Curtis, Glenn. (2022). 6 estate planning must-haves. Investopedia 
• Estate tax. (n.d.). Internal Revenue Service
• U.S. lawyers hourly rates, states 2020 to 2023. (2023). Statista