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Estate Planning

How to Get Started with Estate Planning

A grandfather enjoying time with his granddaughters.

An estate plan is an essential part of your finances, but many people don’t have one. In fact, the number of American adults who have created a will or other type of estate planning document has dropped by almost 25% from 2017 to 2020.*

Many survey respondents reported they don’t have a will because they haven’t gotten around to it (35.7%) or don’t feel they have enough assets to leave to anyone (30.4%).

Percentage of People Who Have Estate Planning Documents by Age Group*:
  • 16.4% of those 18-34 years old

  • 27.2% of those 35-54 years old

  • 47.9% of those 55 and older

You don’t have to be wealthy to benefit from an estate plan. Here are some estate planning basics you need to know.

How an Estate Plan Can Benefit You

Maybe you feel like an estate plan is only for certain kinds of people—but not you. However, anyone with ideas about what should happen to their money, belongings or children after their death needs a plan. At the very least, setting up an advance medical direction, also known as a living will, and healthcare power of attorney are sensible things to have in place.

Here are a few reasons why estate planning is essential:

  • It gives you a say. If you die without a will, state laws will decide what happens to your assets—everything from your home to your children. An estate plan will give voice to your requests.

  • It offers you control. Forms like an advance medical directive or living will lets family members and healthcare providers know what you would want to happen in an emergency health situation. That’s useful if you’re ever in a condition where you can’t speak for yourself.

  • It avoids family turmoil. Setting down your wishes in a legal document may decrease family confusion and disagreement about how to divide your assets.

  • It provides for your minor heirs. If you’re a parent, a will allows you to nominate a guardian for your minor children if you pass away before they reach adulthood. Without a plan, the courts decide who cares for them without your input.

  • It may help minimize taxes. An estate planning attorney may help you reduce the taxes you might owe upon your passing. Strategies may include transferring wealth ahead of time.

What’s in an Estate Plan?

Estate planning includes several different legal documents. A basic estate plan can include the following:


A will declares your wishes for what you want to happen to your assets when you die, and if you have minor children, it nominates a guardian for them.

Not Sure of the Difference Between a Will and a Trust?

Wills are generally considered the basis for an estate plan because they document the division of property and assets.

Trusts are legal arrangements that give a person or persons the right to hold and manage certain assets and make sure possessions go directly to the people you want to inherit them.

Compare the two legal documents.

A living will or advance medical directive

This document states your wishes for what happens in a medical situation if you’re unable to speak for yourself.

Financial power of attorney

This document appoints a representative to make financial decisions on your behalf if you’re incapacitated or unavailable.

Healthcare power of attorney

This document appoints a representative to make healthcare decisions on your behalf if you’re incapacitated and can’t speak for yourself.

HIPAA authorization

The Health Insurance Portability and Accountability Act (HIPAA) restricts who can access your medical records. Some healthcare power of attorney forms include a HIPAA release provision that allows the person you’ve named to access your medical records. But not all include it. You may also want to give access to other people as needed.

What’s Not Covered by Your Estate Plan?

Some of your assets, such as accounts that let you name a beneficiary, are not covered by wills. These may include your pension plan, 401(k) plan, IRA, and life insurance policies.

When an account has beneficiaries named, that designation bypasses anything you’ve noted in your will. So be sure to keep them updated. If you’ve recently gotten married, divorced, had or adopted a child, or had a death in the family, check your beneficiaries to make sure you don’t need to change anything.

Check Your Beneficiaries

In some situations, if you’ve designated a spouse as a beneficiary, it is automatically revoked upon divorce. But that’s not always the case. You may want to check your beneficiaries and ensure they align with your wishes.

How Do You Move Forward?

For more information about wills and trusts, read our Planning Your Legacy article. To get started on your estate plan, there are various do-it-yourself websites online, but we and many experts recommend talking with an estate planning specialist to make sure your documents sync up with state law. Contact a professional to discuss your specific situation.

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2020 Estate Planning and Wills Study,

This information is for educational purposes only and is not intended as estate planning advice. Please consult an estate planner or attorney for advice regarding your situation.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.