Estate Planning

Creating an Estate Plan Is Important for Everyone

Estate planning is not just for the wealthy. An estate plan refers to the combination of a will, trust, and other legal documents that express your wishes for your family, your assets, and yourself upon your death or incapacitating disability.

Without a Well-Designed Estate Plan, Your Wishes May Not Be Carried Out

If you pass away without a will or trust, assets titled solely in your name will be probated and distributed in accordance with state law. Every state has implemented default rules specifying who will inherit in such cases. Your wishes will not matter. A state court will decide how best to care for any minor or disabled children. And if you are incapacitated by an illness or injury and have not executed health care and financial powers of attorney, a state court will decide who is authorized to make decisions regarding your medical treatment and finances. These outcomes can be avoided with a basic estate plan.

Did You Execute a Will, Trust, or Power of Attorney Years Ago?

Once you have created an estate plan, review it periodically to ensure it continues to reflect your wishes. An outdated estate plan may be worse than having no estate plan at all. You should review your estate plan at least every couple of years and after every major life change — marriage, divorce, the birth of a child, the death of a family member or someone named as an agent under a power of attorney, or a major change in financial circumstances.

Leave Your Affairs in Order for Your Family’s Benefit

Use wills, trusts, and powers of attorney to leave your affairs in order. One of the final gifts you can give to your family is a well-executed estate plan. Enjoy the peace of mind of knowing that you have provided your loved ones with a clear statement of your wishes in the event you are no longer available to communicate your preferences.

Common Estate Planning Instruments


When an individual dies owning property titled only in his or her name, the property must go through probate, the court-administered procedure for resolving all claims against the decedent and distributing the decedent’s property.

If the decedent executed a will, the will is filed in court and the estate will be administered and distributed according to its terms. The court will appoint a personal representative to administer the estate. The personal representative is responsible for collecting the decedent’s property, paying outstanding debts, filing an inventory listing the decedent’s assets and liabilities, and settling the estate.

After the court adjudicates any claims asserted against the estate, the personal representative distributes the remaining property to the beneficiaries named in the will or, if there is no will, to the decedent’s heirs.


Trusts are extremely effective estate planning tools. A trust is established when an individual (known as a grantor) transfers property to a trustee with instructions for the trustee to hold and manage the property for the benefit of the beneficiaries of the trust. The trustee has a legal duty to administer the trust in accordance with both the terms of the trust document and the governing law.

The type of trust utilized most often in estate planning is known as a “living trust.” A living trust allows an individual to avoid probate and, in some circumstances, to avoid or minimize federal estate taxes. The grantor establishes a living trust by transferring ownership of property to the trust and maintains control over the trust property by naming himself or herself as the initial trustee and retaining the power to amend or revoke the trust. A living trust allows the grantor to control when a beneficiary will receive his or her share after the grantor’s death. This flexibility is particularly useful when a beneficiary is young or financially irresponsible. For example, the grantor may specify in the trust that the successor trustee (the trustee who serves after the settlor’s death) shall retain the beneficiary’s share in trust until the beneficiary attains a certain age or fulfills a particular condition, e.g., graduates from college.

Trusts also are devices to avoid or reduce estate taxes. By using credit shelter trusts, in 2012 a husband and wife can pass on over $10 million to their heirs without paying estate taxes through a properly drafted credit shelter trust.

Another advantage of trusts is increased privacy. Wills are filed in court. Therefore, the contents of your will and the probate proceedings will be matters of public record. Trust administration, on the other hand, is usually private. Only qualified beneficiaries of the trust are entitled to receive copies of the trust instrument. Unless a judicial proceeding is commenced challenging the trust or the trustee’s actions, the trust documents are not filed in court and remain confidential.

Powers of Attorney

Every estate plan should include a power of attorney. A power of attorney establishes a principal-agent relationship in which the principal authorizes an agent to take specific actions on behalf of the principal. The principal chooses the scope and duration of the agent’s authority.

The most common powers of attorney are general (or financial) powers of attorney and health care powers of attorney.

A general power of attorney authorizes an agent to handle the principal’s day-to-day affairs, such as writing checks, signing tax returns, and making investment decisions. Since the objective of a power of attorney is to ensure continuity of the principal’s affairs in the event of unavailability or disability, the power of attorney usually grants the agent extensive discretion and broad powers. The principal may decide, however, to restrict the agent’s authority.

A health care power of attorney grants the agent the power to make medical decisions for the principal and to sign consents and releases with hospitals and doctors. A Health Care Power of Attorney may include a living will or health care declaration in which the principal express his or her wishes regarding end-of-life decisions.

If you haven’t executed a power of attorney and become incapacitated, a judicial proceeding may be necessary to appoint a guardian and conservator to make decisions for you. This person may be someone you would not want as your decision-maker. In addition, the guardian and conservator must file annual accountings with the court for the duration of your incapacitation.

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