{"id":667,"date":"2025-06-13T06:00:00","date_gmt":"2025-06-13T13:00:00","guid":{"rendered":"https:\/\/qa.simplifimoney.com\/blog\/what-is-an-estate-plan\/"},"modified":"2025-06-15T12:08:44","modified_gmt":"2025-06-15T19:08:44","slug":"what-is-an-estate-plan","status":"publish","type":"post","link":"https:\/\/www.quicken.com\/blog\/what-is-an-estate-plan\/","title":{"rendered":"What Is an Estate Plan, Anyway (And Why Do You Need One)?"},"content":{"rendered":"\n

The following is adapted from Savvy Estate Planning.<\/em><\/p>\n\n\n\n

When many people think of an estate plan, they think about a \u201clast will and testament.\u201d However, a \u201clast will and testament\u201d does not <\/em>constitute an estate plan. Your will is a document in which you specify what you hope will happen after you die. <\/p>\n\n\n\n

Your will is not even a legally binding document until a state court judge makes a court order that the will is a valid, last will. Prior to that, it\u2019s just paper. After you are gone, everyone will read your will and give it weight. But the laws of your state, a judge, and a possibly lengthy legal process will decide what actually happens.<\/p>\n\n\n\n

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What is an estate plan?<\/h2>\n\n\n\n

A true \u201cestate plan\u201d is a larger set of documents that includes a will, but offers you far more power. Crucially, a properly constructed plan protects your estate and your wishes even while you are living. It determines who cares for you if you can\u2019t care for yourself. It gives you and your spouse or other loved one power to protect yourselves and help one another in a variety of extreme situations.<\/p>\n\n\n\n

Of course, this isn\u2019t all an estate plan does. Let\u2019s take a closer look at estate plans, and then consider that all-important question: do you really even need<\/em> one?<\/p>\n\n\n\n

Estate plans protect your legacy<\/h2>\n\n\n\n

When you die, an estate plan determines not just who<\/em> inherits your property, but when <\/em>they inherit and in what manner.<\/em> A true estate plan also decides who has guardianship of your minor children, and who takes care of your dependent and disabled loved ones.<\/p>\n\n\n\n

Just as importantly, a good estate plan will determine who is in charge at each phase of these processes. It will include custom-designed failsafe mechanisms, like \u201ctrust protectors,\u201d to guard against unforeseen circumstances, including changes of trustees due to incapacity, or irresponsible heirs destroying your legacy before it has a chance to do any good.<\/p>\n\n\n\n

A good estate plan will minimize the tax burden on your heirs. In other words, it will be tailored not just to your specific circumstances, but to their<\/em> specific circumstances. And yes, the right plan offers the best possible protection against the expensive, debilitating legal processes known as \u201cprobate\u201d that cause grief to loved ones and often waylay people\u2019s best intentions.<\/p>\n\n\n\n

Finally, an estate plan will also keep your legacy organized. As an estate planning attorney, I cannot tell you how difficult and burdensome it has become for many heirs to find all the documentation pertaining to their deceased loved ones\u2019 bank accounts, debts, business agreements, deeds, outstanding court orders, internet and social media accounts, etc.<\/p>\n\n\n\n

Who needs an estate plan?<\/h2>\n\n\n\n

Every adult should have an estate plan. It\u2019s that simple. Even an 18-year-old should have a signed power of attorney giving someone the right to make healthcare decisions for him or her in case of disability.<\/p>\n\n\n\n

I firmly believe that any adult with children, or any adult with any assets that may be of significant importance to surviving family, is being outright irresponsible if he or she does not have a plan.<\/p>\n\n\n\n

People wrongly assume that only the rich need estate plans. Let me say this clearly: your responsibility has absolutely nothing to do with being rich or poor. If you are living paycheck to paycheck, on minimum wage, an estate plan may be more <\/em>important to the person who inherits your car, your furniture, etc. than it would be to the already-wealthy heir to a multimillion-dollar fortune.<\/p>\n\n\n\n

Suppose your spouse and children depend on your working income. Did you know that if you pass while they are minors, those children will become eligible for Social Security assistance? As of this writing, this averages out to $1,600 a month for one child, or $3,600 for three children. <\/p>\n\n\n\n

This means that if you do not designate a guardian for your children, there\u2019s a very real chance that your relatives will argue over physical guardianship\u2014and, perhaps, the opportunity to share in that income. If you don\u2019t have an estate plan, you are leaving all of this to chance.<\/p>\n\n\n\n

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The living trust<\/h2>\n\n\n\n

For most of my clients, at the center of their estate plan sits a document known as a \u201cliving trust.\u201d Sometimes, attorneys will create separate living trusts for spouses, and sometimes joint trusts, depending on their circumstances and state of residence. <\/p>\n\n\n\n

This type of trust is called \u201cliving\u201d because it goes into effect and protects you even while you are alive. It also lives on past your own death, and in some cases, beyond the death of your immediate heirs. Think of it as a \u201csuper will.\u201d<\/p>\n\n\n\n

A living trust is a legally defined \u201cbucket\u201d into which you place certain kinds of assets so that you and your \u201csuccessor trustees\u201d have control over those assets. A living trust anticipates your incapacity and death and puts into place your long-term wishes. <\/p>\n\n\n\n

A living trust is not a legal fiction, but a well-recognized mechanism that has proven itself time after time to be the best way to plan your estate and protect your legacy for the people and causes you care about. <\/p>\n\n\n\n

During your lifetime, you have complete control over this bucket. But, when you become incapacitated or die, a living trust can be easily handed to the next generation.<\/p>\n\n\n\n

Durable powers of attorney<\/h2>\n\n\n\n

Other crucial documents in an estate plan include \u201cdurable powers of attorney.\u201d Those powers that pertain to property say, \u201cIf I get sick, such-and-such persons have a continuing (durable) power to take care of things that aren\u2019t<\/em> in my trust bucket. This person can collect a registered letter from the post office on my behalf, pay my bills, and choose a nursing home for me.\u201d<\/p>\n\n\n\n

They may go on to say, \u201cThis other person can make decisions for my business and my financial holdings. This third person can deal with my IRA, 401(k), 403(b), digital assets, Facebook page, Twitter feed, blog, Instagram, Dropbox, and other social media accounts.\u201d<\/p>\n\n\n\n

More documents grant advanced healthcare directives and \u201cdurable powers of attorney for healthcare decisions\u201d when you are unable to make those decisions for yourself. Should the doctor try that new operation? Continue chemotherapy? These documents can have different names in different states, like \u201cadvanced healthcare directive\u201d or \u201cphysician\u2019s directive.\u201d<\/p>\n\n\n\n

Scary subjects? Maybe. But if you don\u2019t decide who to entrust with these decisions, someone else will. Why? Because the decisions will have to be made, even if you are just out of action for a few hours on the operating table.<\/p>\n\n\n\n

The living will<\/h2>\n\n\n\n

Most people are familiar with the concept of a \u201cliving will\u201d (not to be confused with a \u201cliving trust\u201d). A living will states your desires in case of truly extreme medical situations. As with the other documents, your attorney can discuss specific issues with you in detail. <\/p>\n\n\n\n

Think of a living will as a permission slip that you give your loved ones to let you go when it\u2019s your time. But you may want to say a lot more than, \u201cIf I\u2019m a goner, pull the plug.\u201d<\/p>\n\n\n\n

If you make sure your living will has a way of getting into the right hands at the right time, its instructions will be followed by the person you designate in your healthcare power of attorney, as well as by your doctors, even if you cannot communicate with them.<\/p>\n\n\n\n

Make sure you\u2019re prepared for whatever comes<\/h2>\n\n\n\n

Along with a living trust, durable powers of attorney (for property and healthcare), and a living will, there are a few more documents that you may want to create during the estate planning process with your attorney. While you may not need all of these, you should talk to your attorney to ensure that your estate is ready for whatever happens.<\/p>\n\n\n\n

For example, you may want a \u201cpour-over will.\u201d This leaves everything that may not be in<\/em> your trust at death (but should be) to <\/em>your trust. <\/p>\n\n\n\n

For example, if a lender requires you to take your home out of your trust to refinance the mortgage and you forget to transfer the property back into the trust by deed, your will is there to make sure that the home is distributed under the terms of the trust, rather than your state\u2019s laws of intestacy.<\/p>\n\n\n\n

You may also want to create a HIPAA (Health Insurance Portability and Accountability Act) authorization in your estate plan. This allows designees access to your healthcare documents. Think about how important such a document might be. You don\u2019t want vital healthcare information withheld from people who need it in order to help you, simply because you didn\u2019t take a little time to get this document in order.<\/p>\n\n\n\n

Let your specific circumstances guide you<\/h2>\n\n\n\n

The documents I\u2019ve described here are a good start to an estate plan. However, this is certainly not an exhaustive list. More documents will be created, depending on your specific circumstances. <\/p>\n\n\n\n

The important thing to remember is that an \u201cestate plan\u201d is not one document, but a collection of appointments, nominations, and directives that determine who will do what, and how your stuff will move from point A to point B. This is not a simple or static collection of documents, but one that must be properly created, maintained, and updated over time.<\/p>\n\n\n\n

No estate plan? Not even a will? This is called \u201cintestate succession.\u201d Believe me, even though you are gone, you don\u2019t want your heirs to go through that kind of succession. Intestate succession generally requires a probate proceeding to settle the estate, and it is certainly no way to leave a viable legacy\u2014no matter who you are or how much money you have.<\/p>\n\n\n\n

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See how Quicken LIfeHub makes things easier on your family and executor.
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Author, attorney, and estate planning expert James L. Cunningham Jr. says an estate plan is critical if you’re over 18, even if you own nothing. Learn why.<\/p>\n","protected":false},"author":30,"featured_media":670,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_robots_primary_cat":"none","_seopress_titles_title":"What Is an Estate Plan, Anyway (And Why Do You Need One)? | Quicken","_seopress_titles_desc":"Author, attorney, and estate planning expert James L. Cunningham Jr. says an estate plan is critical if you're over 18, even if you own nothing. Learn why.","_seopress_robots_index":"","inline_featured_image":false,"footnotes":""},"categories":[69],"tags":[],"class_list":["post-667","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance"],"acf":[],"jetpack_featured_media_url":"https:\/\/www.quicken.com\/blog\/wp-content\/uploads\/2022\/08\/young-adults-looking-at-documents.jpg","_links":{"self":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/667","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/users\/30"}],"replies":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/comments?post=667"}],"version-history":[{"count":8,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/667\/revisions"}],"predecessor-version":[{"id":8817,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/667\/revisions\/8817"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/media\/670"}],"wp:attachment":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/media?parent=667"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/categories?post=667"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/tags?post=667"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}