A Wills and Estate Planning Study from 2025 found that only 24% of Americans have a will, a major decline since 2022. That means that about 75% of Americans die “intestate,” which means the state laws dictate who their money passes on to. Estate planning might sound like something only for the wealthy, but it’s truly for everyone. At its heart, estate planning is about caring for your loved ones and ensuring your wishes are carried out after you’re gone. It’s about having peace of mind, knowing that you’ve prepared for the future. Let’s dive into the details of estate planning.
The meaning of “estate planning”
In simpler terms, estate planning is the process of deciding how your assets (like your home, savings, investments, and personal belongings) will be managed and distributed after you pass away or become incapacitated. It involves creating a plan that reflects your values and ensures your loved ones are taken care of. This might include writing a will, setting up trusts, designating beneficiaries, and making decisions about your healthcare. Estate planning also helps minimize taxes and avoid legal complications, making the transition as smooth as possible for your family.
You don’t have to be rich to get an estate plan
Many people falsely believe that only millionaires need estate plans. Not true! Estate plans are for everyone. Remember, estate planning is more than just distributing assets. It can be about healthcare decisions, power of attorney, guardianship, and even pet ownership. Plus, even if you only have $5,000 to your name, you still may want to ensure that money goes where you want it to.
You already have an estate plan in place–your default state law
Did you know you already have an estate plan in place? That’s right–your state law dictates what happens to your stuff when you die if you don’t have something in place… and it may not be what you want.
For example, in some states, your stuff may be split 50/50 between your current spouse and your children, even though your current spouse is not your children’s parent. In other words, do you want your assets to pass to your second or third spouse 50/50 instead of your kids 100%? Maybe, maybe not, but either way–you lose out on that decision without an estate plan.
What are the steps to get an estate plan in place?
Taking the first step towards creating an estate plan can feel overwhelming, but remember, you don’t have to do it all at once. Here’s a simple roadmap to guide you through the process:
Step 1: Take inventory of your assets
Make a list of everything you own – your home, bank accounts, investments, insurance policies, and even sentimental items. This will help you understand the scope of your estate.
Step 2: Identify your beneficiaries and executors
Think about who you want to inherit your assets and who you trust to carry out your wishes. Beneficiaries are people who will take your stuff when you die, and executors are the people who will ensure your wishes are carried out properly.
Step 3: Consider your options (trust, will, power of attorney, etc.)
Research different estate planning tools like wills, trusts, and powers of attorney. Each serves a different purpose, and you can choose the ones that best suit your needs. If you have no idea and don’t want to research yourself, skip Step 5 and seek professional legal help.
Step 4: Seek legal guidance
Don’t hesitate to reach out to an estate planning attorney. They can provide personalized advice, draft legal documents, and ensure your plan is legally sound.
Step 5: Communicate your plan
Talk to your loved ones about your decisions. Open communication can prevent misunderstandings and ensure a smoother transition in the future. For example, if you have set up a trust for your granddaughter, you may want to let her know the basics of how the trust is formatted and what she can expect.
Step 6: Review and update regularly
Life is full of changes, so revisit your estate plan periodically to make sure it still reflects your wishes and circumstances. For example, you may have a trust set up for your son and his wife after you pass away. However, if they get a divorce, you may want to change things a bit to remove his wife (or not, totally up to you!).
Remember, estate planning is a journey, not a destination. Take it one step at a time, and don’t be afraid to ask for help along the way. By planning ahead, you’re giving yourself and your loved ones a precious gift – peace of mind and security for the future.
What are some options for an estate plan?
So, what are some estate planning options that you can utilize? Well, there are quite a few, but here are the top five documents everyone should consider:
- Last Will & Testament (including Guardianship): A Last Will & Testament specifies how you want your property distributed after your death and designates a guardian for any dependents.
- Living Will: A living will addresses your medical care preferences if you become incapacitated, relieving loved ones from making difficult decisions.
- Medical Proxy: A medical proxy appoints someone to make medical decisions on your behalf.
- Durable Power of Attorney (POA): The durable power of attorney allows an agent to manage your financial and legal matters.
- Living Trust: A living trust helps avoid probate, provides legal and tax benefits, and offers greater control over asset distribution.
What is the difference between will and estate planning?
Think of it like this: a will is like a single chapter in a book, while an estate plan is the entire story.
A will is a legal document that primarily focuses on what happens to your assets after you pass away. It allows you to name beneficiaries, appoint guardians for minor children, and express your funeral preferences. It’s an essential part of any estate plan, but it doesn’t cover everything.
An estate plan, on the other hand, is a comprehensive approach that encompasses a broader range of tools and strategies. It goes beyond a will and includes other important documents like trusts, powers of attorney, and healthcare directives. These additional components can help you manage your assets during your lifetime, avoid probate, minimize taxes, and address potential incapacity.
Takeaway: A will is focused on distributing your assets, while an estate plan provides a more holistic approach to managing your affairs both during your lifetime and after you’re gone. It’s a way to ensure your wishes are respected, your loved ones are protected, and your legacy is preserved.
Estate planning isn’t hard and expensive anymore
With online tools like Trust & Will, you can now get your estate planning done quickly and for an affordable price! It’s no longer the daunting experience of sitting in a cold, bright attorney’s office talking about the scarily morbid topic of death with a stranger. Now, it’s streamlined, efficient, and, best of all… inexpensive!
The bottom line on estate planning
A staggering number of Americans (~70% of Americans, that is) are leaving their loved ones vulnerable by neglecting to get an estate plan. Yet, as we’ve explored, estate planning isn’t just for the wealthy or those with complex assets. It’s a gesture of love, a safeguard for your family’s future, and a way to ensure your wishes are honored even when you’re no longer here.
The good news is that taking the first step toward creating an estate plan has never been easier. With accessible online resources and the guidance of professionals, you can craft a plan that aligns with your values and provides peace of mind. Remember, it’s never too early or too late to take control of your legacy and leave a lasting gift for those you hold dear.
Nicole Sheehey is the Head of Legal Content at HelloPrenup, and an Illinois licensed attorney. She has a wealth of knowledge and experience when it comes to prenuptial agreements. Nicole has Juris Doctor from John Marshall Law School. She has a deep understanding of the legal and financial implications of prenuptial agreements, and enjoys writing and collaborating with other attorneys on the nuances of the law. Nicole is passionate about helping couples locate the information they need when it comes to prenuptial agreements. You can reach Nicole here: Nicole@Helloprenup.com
0 Comments