Wills and Estate Planning Basics

Estate planning isn’t just for the wealthy

You may hear the phrase “estate planning” and picture mansions and million-dollar trusts. But in actuality, your estate is simply everything you own and everything you’ve planned for financially. That could include a bank account, retirement account, life insurance policy, home, vehicle, a dog, a cat, or your sofa and record collection.

If you’re over 18, you already have an estate. However, estate planning becomes especially important if you have children, own property, have savings or investments, or want a say in who makes financial or healthcare decisions on your behalf if you’re unable to make them yourself.

What happens if you die without a will?

When someone dies without a valid will, they are said to have died intestate.

In that situation, state law determines who receives assets and who may be responsible for handling the estate, rather than your personal preference. If you have minor children, a court may also need to make decisions about guardianship.

People may assume their wishes will automatically be followed, but that's not always the case. Without written instructions, family members may be forced to navigate legal processes during an already difficult time.

A will can't prevent every challenge, but it gives you the opportunity to clearly communicate your wishes and provide guidance for the people you leave behind. Without one, you’re choosing to let state law determine what happens.

Four documents that form the foundation of an estate plan

Roughly 73% of Americans say estate planning is important to them, yet most still haven’t completed even basic planning documents.¹

Basic estate planning generally starts with four core documents:

1. A will: Directs how assets are distributed and names guardians for minor children.
2. A revocable trust: Holds assets and may help avoid probate while providing flexibility during life and after death.
3. A durable power of attorney: Authorizes someone to manage financial matters if you’re unable to do so.
4. A healthcare directive (living will): Documents healthcare wishes and identifies someone to make medical decisions on your behalf.

Will

A will is a legal document that outlines who should receive your assets after your death. It’s also the primary way parents can name a guardian for their children. Yet 50% of parents report having no estate planning documents for children in place, including those that would designate a legal guardian.¹

Even if you don’t have children, a will can help ensure your wishes are clear by specifying who should receive your financial accounts, personal belongings, pets, and other assets.

Estimated cost of a will: $15 to $1,500³

Revocable trust

A revocable trust, often called a living trust, is a legal arrangement that can hold assets during your lifetime and distribute them after death. Unlike a will, assets held in a trust may avoid probate, the court-supervised process of settling an estate.

One of the biggest differences between a will and a trust is that a trust can hold and manage assets during your lifetime, while a will generally takes effect after death.

Estimated cost of a living trust: $1,000 to $4,000³

Durable power of attorney

A durable power of attorney is one of the core estate planning documents. Through it, you designate someone to handle financial matters if you're unable to do so.. This person, who you designate, handles financial matters if you’re incapacitated and unable to make decisions yourself.

Estimated cost of a power of attorney: $200 to 500 each³

Healthcare directive

Sometimes called a living will, a healthcare directive communicates your medical preferences and identifies someone to make healthcare decisions on your behalf if necessary.

Not everyone needs a trust immediately, but nearly every adult can benefit from having a will, a power of attorney, and a healthcare directive in place.

Estimated cost of a healthcare directive: $200 to $1,000³

Beneficiary designations may be the most overlooked part of an estate plan

People may assume their will controls where all of their assets go. In reality, some of the most valuable assets people own pass directly to named beneficiaries instead.

This often includes:

• Life insurance policies
• 401(k) plans
• IRAs
• Annuities
• Transfer-on-death or payable-on-death accounts

You should review beneficiary designations regularly, especially after major life events such as marriage, divorce, the birth of a child, or the death of a previously named beneficiary.

An outdated beneficiary designation can create unintended consequences. For example, if your ex-spouse is listed on a retirement account, depending on applicable law and the account's beneficiary designation. Life insurance can create an immediate estate

If you think estate planning only becomes important after you’ve accumulated significant wealth., That isn't necessarily the case.

Your family may not have enough assets to replace a lost income, fund your kids’ future education costs, pay off debt, or maintain their standard of living if you die. But with life insurance, they can receive a death benefit that may be able to bridge that gap when they need it most.

This is one of the biggest benefits of life insurance—it creates an immediate estate without you having to spend decades accumulating assets. You can put financial protection in place by purchasing a policy today, and it can help ensure your loved ones have resources available if the unexpected happens.

What does estate planning cost?

Basic estate planning documents—such as a will, durable power of attorney, and healthcare directive—can often be completed for around $415 to $3,000, according to the National Council on Aging (NCOA).²

For complex situations involving an attorney, the NCOA estimates you could pay around $2,000 to $5,000.² This would be for a will, trust, powers of attorney, and advanced healthcare directive.

Once an estate plan is complete, it may provide peace of mind that could outweigh the up-front expense. Probate delays, family disputes, unintended asset distributions, and court involvement can ultimately create far greater financial and emotional strain.

Estate planning works best when financial and legal professionals coordinate

There are several estate planning professionals you can work with to protect your legacy. For instance, a financial professional can help review your beneficiaries, determine if you have enough life insurance, ensure your retirement accounts are meeting your estate planning objectives, and identify gaps that could affect your family’s financial future.

An estate planning attorney can handle the legal side of the process, including drafting wills, trusts, powers of attorney, and healthcare directives.

Estate planning is really about peace of mind

The most common reasons why people create a will or trust are for peace of mind and protecting loved ones.¹

Whether you’re protecting young children, caring for aging parents, preserving family assets, or simply making your wishes clear, having a plan can provide confidence that the people you care about will be taken care of.

You don’t need a large estate to benefit from estate planning. You simply need something worth protecting, which could just boil down to the people they love.

Frequently asked questions