The Foundations of Your Estate Plan
For many people, "estate planning" sounds like something reserved for the very wealthy or the very old. To me, it simply means making decisions now about how your money, property, and care will be handled if you become incapacitated or pass away. Look, I get it. These aren’t fun topics to consider or even talk about but, without a plan, those decisions might be left to state law and the courts, which rarely reflect what you or your family would have wanted. The good news is that you don't need to tackle everything at once, and there might be additional work needed based on your personal circumstances, but these are five items to lay a good foundation:
1. Obtain a Will
A will is the cornerstone of any estate plan. It names who receives your assets, who serves as executor to carry out your wishes, and, importantly, who would care for any minor children as guardian. Dying without a will means a court decides these matters based on default state rules, which may not match your intentions at all. Even a simple will is far better than none.
2. Name Your Beneficiaries
Many of your most valuable assets, retirement accounts, life insurance policies, and bank accounts with payable-on-death designations, pass directly to whoever is listed as beneficiary, regardless of what your will says. These designations are easy to overlook after life changes like marriage, divorce, or the birth of a child. Review them every few years to make sure they still reflect your wishes.
3. Set Up Powers of Attorney
A financial power of attorney lets someone you trust manage your finances if you're unable to do so yourself, whether due to illness, injury, or simply being unreachable. Without one, your family may need to petition a court for guardianship or conservatorship, a costly and time-consuming process. This document is just as important as a will and is often overlooked.
4. Create a Healthcare Directive
Depending on which state you live in it could also be called a living will or advance directive. This document spells out your wishes for medical treatment if you can't communicate them yourself, and names a healthcare proxy to make decisions on your behalf. Pairing this with a HIPAA authorization ensures your chosen person can access your medical information when it matters most.
5. Consider a Trust
Trusts aren't just for the wealthy. A revocable living trust can help your loved ones avoid the time and expense of probate, keep your affairs private, and provide a clear structure for managing assets if you become incapacitated. Depending on your goals, such as providing for a child with special needs or minimizing estate taxes, more specialized trusts may also be worth discussing with an advisor or attorney.
You don't have to build your entire plan in a single sitting. Begin with a will and powers of attorney, since these address the most immediate gaps, then layer in beneficiary reviews and trust planning as your circumstances evolve. Over the next five weeks, I plan to go a little deeper into each of these items and talk about their importance. The main thing isn't having a perfect plan today; it's building a plan that protects the people you care about, starting now.
Bryan Kiss, CFP®, Senior Advisor / Trust and Estates Lead
*This article is intended for general educational purposes only and does not constitute legal, tax, or financial advice. Estate planning involves personal circumstances that vary widely, so please consult a qualified attorney or financial professional before making decisions.
