Estate planning guide

A comprehensive look at estate planning

Article published: May 25, 2023

If you hear the words “estate planning” and think of multimillionaires with huge mansions and valuable family heirlooms, you’re not alone. But the truth is they aren’t the only ones who need an effective legacy strategy. So we’ve put together this comprehensive guide to help you navigate the estate planning process.

Why is it important to have an estate plan?

Before we start, however, you might be wondering why an estate plan is so important in the first place.

Whether you’re a multimillionaire or living modestly, you likely want to have control over who receives your assets and treasured possessions after you’re gone. But beyond assets and personal property, you’ll also want to pick who will become the caregiver for any children or pets. And if you’re incapacitated or otherwise incapable of making medical or financial decisions, you’ll want to put someone you trust in charge. Without a comprehensive estate plan, these decisions will be left up to a court or state law.

By taking the time to think through and create a complete plan for your estate, you not only ensure your last wishes will be fulfilled, but you also show your family and loved ones that you care. So how is it done?

The basics of estate planning

Really, estate planning is just another way to make arrangements for what happens to your personal property and assets if you were to pass away. These assets could include your real estate or car, any savings you have and even your social media accounts. Estate planning is also making a plan for who you would like to make health care decisions and financial decisions for you, if you were to become incapacitated. In this broad sense, everybody has an “estate,” which is why everyone needs a plan.

When should you start planning your estate?

At Edelman Financial Engines, we think that everyone should begin estate planning as early as possible – ideally the moment they turn 18. Of course, whether you’re graduating college, expecting your first child or welcoming grandchildren into the world, it’s never too late to start.

How does an estate plan work?

An estate plan is more than simply a last will and testament. To help you understand the key elements of an estate planning strategy, let’s go through some of the essential documents that compose a comprehensive estate plan.

Last Will and Testament

When people consider their estate planning, they often first think about the last will and testament. This is a legal document that allows you to name a guardian for your minor children, describe how your assets are to be distributed at your passing, and names the person (called the “executor” or “personal representative”) who is responsible for administering your estate in accordance with the terms of your will.

In the absence of a will, you will be considered to have died “intestate” and the laws of the state where you reside will determine who inherits your assets.

Revocable Living Trust

A revocable living trust (sometimes referred to as simply a “revocable trust” or a “living trust”) is an estate planning document that serves to both manage your assets during your lifetime and act as a testamentary substitute when you pass away. This document is called a revocable trust because you have the right to change its terms or even revoke the trust altogether – just like any other estate planning document. It is only at your passing that the trust becomes unamendable or irrevocable.

At your passing, your revocable trust will work in tandem with your last will and testament to effectuate your wealth transfer goals.

One of the benefits of a revocable trust is that assets held inside the trust prior to your passing are considered a non-probate asset, meaning that an executor does not need to be appointed by a probate court before your fiduciary has access to cash and other assets within your revocable trust.

Probate is the legal process to validate a last will and testament following an individual’s death and the formal appointment of the executor.

The probate process varies by jurisdiction and can range in complexity, but it generally is not a process that takes a tremendous amount of time. A number of jurisdictions offer simplified proceedings for smaller-value estates. Probate courts charge a filing fee, which may be a flat fee or a percentage of the probate assets.

Probate is different from the estate settlement process. Estate settlement is the process in which your executor collects your assets, pays your debts (such as final medical expenses and income taxes), pays the expenses of administration, and distributes your assets in accordance with the terms of your will. This process can take anywhere from the better part of a year to several years to complete; this is the case even if your estate plan also includes a revocable trust.

Beneficiary Designations and Asset Titling

Beneficiary designations supersede all other estate planning documents, such as your will or revocable trust. Assets with designated beneficiaries do not pass through your estate and the estate settlement process, and the terms of your will or revocable trust do not govern the disposition of these assets.

Similarly, the way an asset is titled can also determine who will inherit that given asset. For example, upon the death of one owner of an asset titled as joint tenants with rights of survivorship, the deceased owner’s interest in the property passes to the surviving owner by law, regardless of what a will or revocable trust may provide.

Because of this, it’s important that your beneficiary designations and asset titling align with your overall estate planning goals.

Durable Power of Attorney

With a durable power of attorney, you give one or more loved ones or trusted individuals the right to make financial and other non-health care decisions on your behalf while you are alive. This allows them to manage your investment and bank accounts, pay your bills, file an income tax return and even cancel a subscription service. This is an immense responsibility, so the person you choose should be someone you fully trust.

In the absence of a durable power of attorney, no one (including spouses) has the right to make financial and other non-health care decisions on your behalf if you were to become incapacitated.

Health Care Directive

What if you suffered a severe injury or illness and cannot make health care decisions for yourself, even if just for a temporary period of time? Who would you like to make important decisions for you?

With a health care directive (sometimes called a medical power of attorney), you legally authorize a family member, loved one or someone you trust to make medical decisions on your behalf if you’re not able to give informed consent to the medical provider or hospital staff yourself.

For individuals without a health care directive, state law dictates who will make medical decisions on that person’s behalf. That’s why all adults 18 and older need a health care directive.

Living Will

A living will allows you to leave instructions for your end-of-life care. Do you want machines to keep you alive through heroic means, on the theory that your doctors will find a way to restore you to health? Would you like the maximum pain relief available? Are there any religious tenets that you would like honored?

There’s no right or wrong answer to such questions. But without a living will stating your wishes, it could create conflict or angst among your loved ones during an already difficult time.

Other Estate Planning Considerations

In addition to these documents, there are a few additional estate planning considerations.

Digital Assets

We’d be remiss if we didn’t include digital assets in our estate planning guide as we live in such a technology-driven world. Between smartphones and the cloud, we practically have everything we need at our fingertips. Most don’t realize that there is more to digital assets than just online banking and retirement accounts. It can also include your social media and email accounts, and anything with a username and password.

It is important to designate individuals that can access these accounts upon your passing. If possible, also provide current login information and any PINs or answers to security questions. While these are good tools for cybersecurity, they become a hindrance to those who actually need to access your accounts.

Estate Tax

Depending on your net worth and where you live, you may need to be aware of potential estate taxes. The federal estate tax applies to all estates worth more than $12.92 million (for 2023).

Even if your estate is under the federal limit, your estate might have to pay estate taxes at the state level. Currently, only 12 states and Washington D.C., have a separate estate tax1, including:

  1. Connecticut
  2. Hawaii
  3. Illinois
  4. Maine
  5. Maryland
  6. Massachusetts
  7. Minnesota
  8. New York
  9. Oregon
  10. Rhode Island
  11. Vermont
  12. Washington


Estate tax exemption amounts vary from state to state, but you likely won’t need to worry about estate taxes if your assets are worth less than $1 million.

Any assets transferred to a surviving spouse or a qualified charitable organization are exempt from both state and federal estate taxes.

Inheritance tax

In addition to taxes on your estate, you might also need to consider if your beneficiaries will be subject to an inheritance tax. Unlike an estate tax, which is levied based upon the value of a decedent’s estate, an inheritance tax is levied on beneficiaries based upon their relationship to the decedent.

While there is no federal inheritance tax, there are six states that have such laws1, including:

  1. Iowa
  2. Kentucky
  3. Maryland
  4. Nebraska
  5. New Jersey
  6. Pennsylvania


Specific rules and exemptions vary by state, but generally a surviving spouse, and sometimes the decedent’s children, won’t have to pay any taxes on the receipt of an inheritance. Some states levy higher inheritance tax rates for assets received by an extended family member and unrelated heir, such as a cousin or family friend.

Estate Planning Attorney

Finally, to help you prepare and update your estate plan, we strongly believe in using an estate planning attorney. They can offer legal advice for your state’s laws and help you draft all of your documents to protect both the wealth you spent a lifetime accumulating and the family you spent a lifetime caring for. Upon your death, an estate planning attorney can also work with your family, executor and any trustees to distribute your assets and carry out your wishes.

Some estate planning attorneys charge an hourly rate for their services, while others charge a flat rate. The average hourly rate ranges from about $210 to $3502. Your legal bill can vary broadly depending on the complexities of your situation. For estate plans involving a trust document, you might see fees starting around $1,000, with highly complex plans costing $5,000 or more3. Everyone’s circumstances are different, but we believe the costs are well worth it.

Here at Edelman Financial Engines, there are two approaches to finding the right estate planning attorney for you:

  1. You find your own estate planning attorney with whom we coordinate.
  2. We provide you the names of several attorneys located in your area.


In either case, we’ll work with you to help you plan for your estate and protect your family and wealth after you’ve passed on.

5 Steps to estate planning

Now that we understand the key elements that go into estate planning, it’s time to walk through the process. Your financial planner and estate planning attorney can guide you through each step to build a comprehensive plan that accounts for your wishes, your family and your assets.

To help, we’ve put together a checklist of the five steps you’ll need to take:

1. Inventory Your Assets

Start by making a list of all your assets and property. This includes physical objects, such as:

  • Real estate or land
  • Vehicles, like cars or boats
  • Personal possessions
  • Valuable collectibles

In addition, you’ll also need to account for your intangible assets, as these are often where the majority of your wealth lies. Intangible assets can include things like:

  • Bank accounts
  • Investments
  • Businesses you own or have an interest in
  • Life insurance policies
  • Retirement plans

Outside of what you own, you should also consider what you owe. Be sure to include any outstanding liabilities, such as mortgages or debts.

2. Choose your representatives

Think about who you would like to make financial and health care decisions for you, if you are unable to do so yourself, and who you would like to settle your estate. You might also give some thought to having first choices and second choices, just in case your first choice isn’t able to act for any reason.

It is also a good idea to communicate these choices to your family so that your children and other loved ones know who will be making decisions should something happen to you. This also gives you the opportunity to discuss the responsibilities that come with specific positions, like an attorney-in-fact, health care representative and executor.

3. Identify Your Wealth Transfer Goals

Once you’ve inventoried your assets and chosen your fiduciaries, you want to be thinking about your wealth transfer goals. In other words, who would you like to receive your assets when your are gone. You can be as specific or as general as you would like, just so long as you are clear on who benefits from your estate. Your estate planning attorney will work with you to be sure that your wishes are properly documented.

4. Execute Your Estate Plan

This is the part of the estate planning process where you meet with your estate planning attorney, who will draft your documents and help you get everything signed.

Once you have your documents signed, be sure to keep them in a safe, but easily accessible place. You may wish to give your health care representative a copy of your health care directive and your attorney-in-fact a copy of your durable power of attorney. Your executor should also know the location of your original will.

Your attorney and financial advisor can also help with any beneficiary designations that need to be updated.

5. Review Your Estate Plan on a Regular Basis

It’s absolutely essential to review your estate plan regularly. Not only does this help keep things up to date, but it also prevents your assets from going to the wrong people if, for example, you left an ex-spouse as a beneficiary designation.

At Edelman Financial Engines, we believe it’s necessary to update your plan whenever there is a major life event, such as a:

  • Birth
  • Illness
  • Death
  • Marriage
  • Divorce
  • Relocation
  • Retirement

However, that doesn’t mean you should wait until a significant change in your life. Absent of a major event like those listed above, you should review and update (if necessary) your plan every three to five years.

Take Advantage of Professional Financial Guidance

You don’t need to be an expert in estate planning, but you are the expert on your own situation. After all, no one knows better than you what your assets are and how you want to disperse them.

Remember, estate planning goes beyond just leaving a will or designating beneficiaries on accounts. Taking steps now to ensure your wishes are carried out can save those who love you from suffering additional heartbreak and stress. Reference this estate planning guide as you prepare – or review – your estate plan and consult with your financial advisor for additional assistance or recommendations.

Once you’ve given it some thought, talk to your financial advisor, who can help you with the estate planning process. They can work with your estate planning attorney or help you find one in your area – then they can work together to determine the strategy you need. If you choose another attorney, just make sure they specialize in estate planning.

1. Fritts, J. (June 21, 2022). Does Your State Have an Estate or Inheritance Tax? Retrieved May 12, 2023, from

2. Ramirez, D. (May 8, 2023). Estate Planning Attorneys: What They Do and How to Choose One, Retrieved May 12, 2023, from

3. Women Who Money. (January 10, 2023). How Much Does Estate Planning Cost? Retrieved May 12, 2023, from

The information regarding estate planning should not be construed as tax or legal advice and is for general informational purposes only.


Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from your qualified tax and/or legal professionals to help determine the best options for your particular circumstances.

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