What Estate Planning Actually Covers
Estate planning is the process of deciding who gets your money, property, and possessions after you die, and who makes medical and financial decisions for you if you cannot. It is not just for the wealthy. Whether you own a house, have a bank account, or want to say who raises your grandchildren, you need a plan.
Most people think of a will first, but estate planning includes several documents working together. A will tells the court who inherits what. A power of attorney lets someone act on your behalf while you are alive — paying bills, selling property, managing investments. A healthcare proxy or medical power of attorney names who makes medical choices if you cannot. A living will (also called an advance directive) states what medical care you do or do not want if you are dying or permanently unconscious.
Without these documents, state law decides who inherits your estate, which may not match your wishes. It also means your family may have to go to court to manage your affairs or make medical decisions, which costs time and money.
Key Takeaways
- A complete estate plan includes a will, power of attorney, healthcare proxy, and living will — not just one document.
- You can create basic documents yourself using online templates, but an attorney is worth the cost if your situation is complex, you own real estate, or you have a blended family.
- State law controls which documents you need and what they must say, so a plan made in one state may not work if you move.
- Probate — the court process that settles your estate — can be avoided or simplified using trusts, beneficiary designations, and joint ownership, depending on your goals.
- You should review and update your plan every three to five years or after major life changes like marriage, divorce, or the birth of grandchildren.
The Documents You Need and What Each One Does
A will is a legal document that names an executor (the person who carries out your wishes) and says who gets your property. It only takes effect after you die and only covers property that does not have a named beneficiary. It does not avoid probate — the court process that proves the will is valid and distributes the estate. Probate can take months to years and costs money in court fees and attorney time.
A revocable living trust holds your property during your lifetime and after your death. You name a successor trustee to manage it if you cannot. Property in the trust avoids probate and stays private (wills are public record). The trade-off is that you must transfer property into the trust and update it if you buy new assets. A trust costs more to set up than a will but saves money and time later.
A power of attorney names someone to handle money and property decisions if you become unable to do so. A durable power of attorney stays in effect even if you become incapacitated. Without one, your family may have to ask a court to appoint a conservator or guardian, which is expensive and takes time. You can make it effective immediately or only if you become incapacitated (called "springing").
A healthcare proxy or medical power of attorney names someone to make medical decisions for you if you cannot. A living will or advance directive states your wishes about life support, resuscitation, and end-of-life care. These two documents work together. The proxy makes decisions; the living will guides those decisions.
DIY Estate Planning Versus Hiring an Attorney
Online services and templates cost $50 to $300 and work well for straightforward situations: you are single or married with no children from previous relationships, you own a house and a car, you have a small bank account, and your wishes are simple. Services like LegalZoom, Nolo, and Rocket Lawyer generate documents based on your state's law. You print, sign, and store them yourself.
An attorney costs $1,000 to $5,000 or more, depending on complexity and your location. You should hire one if you own real estate in more than one state, have a blended family, own a business, have significant assets, want to minimize taxes, or want to set up trusts. An attorney also makes sure documents are signed correctly (many states require witnesses or notarization) and filed properly. They can also spot problems a template would miss — for example, naming someone as executor who is not able to do the job, or forgetting to update beneficiary designations on retirement accounts.
A middle ground is to use an online service to draft documents, then have an attorney review them for $300 to $800. This catches errors without paying for a full rewrite.
Probate: What It Is and How to Avoid or Simplify It
Probate is the court process that proves your will is valid, identifies your heirs, pays your debts and taxes, and distributes what is left. It is public, takes three months to two years (longer if anyone contests the will), and costs 3 to 7 percent of the estate in court fees, attorney time, and executor fees.
You can avoid probate entirely by using a revocable living trust, which transfers to your successor trustee outside of court. You can also reduce what goes through probate by naming beneficiaries on retirement accounts (401k, IRA), life insurance policies, and bank accounts (called "payable on death" or POD accounts). These pass directly to the named person and skip probate. Joint ownership of property also avoids probate — when one owner dies, the property goes to the other owner automatically.
The downside of these methods is that they require you to name specific people and update them if your wishes change. A beneficiary designation on a retirement account overrides what your will says, so if you name an ex-spouse and forget to change it, they get the money even if your will says otherwise.
State Laws and Moving to a New State
Each state has different rules about what documents you need, how they must be signed, and what happens if you die without a will. A will made in one state is usually valid in another, but powers of attorney and healthcare documents may not be. Some states do not recognize a power of attorney made in another state, or they require it to be notarized or witnessed in a specific way.
If you move to a new state after making your plan, review it with an attorney in that state. You may need to remake some documents or add a statement saying they were made under the law of the state where you made them. This is especially important if you own real estate in more than one state — property is governed by the state where it is located.
Some states are "community property" states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), which means spouses own marital property equally. Others are "common law" states. This affects how property passes to a surviving spouse and how much tax is owed. If you move between these types of states, your plan may need to change.
Updating Your Plan and Keeping Documents Safe
Review your estate plan every three to five years, even if nothing has changed. Laws change, and your situation changes. Update it if you marry, divorce, have a child or grandchild, move to a new state, buy or sell major property, or your financial situation changes significantly.
You do not need to remake the entire plan. You can change a will with a codicil (a short amendment) or remake it entirely. You can revoke a power of attorney and make a new one. Some changes are as simple as updating a beneficiary designation on a bank account or retirement account.
Store original documents in a safe place: a safe deposit box at a bank, a home safe, or with your attorney. Tell your executor, healthcare proxy, and family where to find them. Keep copies at home. Do not store originals in a safe deposit box alone — banks may seal the box after death, and your family will have to go to court to open it. Store the original will with your attorney or in a safe deposit box with a note saying where a copy is kept.
Taxes and How Estate Planning Can Reduce Them
Federal estate tax applies only to estates larger than a certain amount — the threshold changes yearly and is currently over $13 million for individuals. Most people do not owe federal estate tax. However, some states have their own estate or inheritance taxes at much lower thresholds, and if you have a large estate, taxes can take a significant portion.
An attorney can help you use strategies to reduce taxes: gifting money to family members during your lifetime (you can give up to a certain amount per person per year tax-free), setting up trusts that split assets between spouses, or using life insurance to pay taxes owed. These strategies are complex and depend on your specific situation, so they are worth discussing with an attorney if your estate is substantial.
If you have a modest estate, taxes are usually not a concern. Focus instead on making sure your wishes are clear and your documents are valid.
Frequently Asked Questions
Do I need a lawyer to make an estate plan?
No, but it depends on your situation. If you are single, have no children, own little property, and your wishes are straightforward, an online template works. If you own real estate, have a blended family, or want to set up trusts, an attorney is worth the cost. Many attorneys offer flat fees for basic plans, so ask about pricing before you assume it is too expensive.
What happens if I die without a will?
State law decides who inherits your property — usually your spouse and children in a set order. If you have no spouse or children, it goes to parents, then siblings, then more distant relatives. Your wishes do not matter. Your family also has to go through probate, which is longer and more expensive without a will.
Can I change my will after I make it?
Yes. You can make a new will that replaces the old one, or you can add a codicil (a short amendment). Make sure you sign and date it the same way you signed the original, and follow your state's rules about witnesses or notarization. If you make a new will, destroy the old one or clearly mark it as revoked so there is no confusion.
Who should I name as executor?
Choose someone you trust who is organized, willing to do the work, and able to handle conflict if family members disagree. It does not have to be a family member — it can be a friend or a professional like a bank or attorney. Tell them before you name them, and make sure they understand what the job involves. You can also name a backup executor in case your first choice cannot do it.
Should I put my house in a trust?
A revocable living trust avoids probate and keeps your property private, but it requires you to transfer the deed into the trust's name. This is not complicated, but it does take a step. If you want to avoid probate and your estate is simple, a trust is worth it. If you are mainly concerned about privacy or want to name someone to manage the property if you become unable to, a trust makes sense. If you just want a will, that works too — it just means probate later.