Estate Planning Basics: A Smart Way To Start The New Year
With a new year almost upon us, many people are refocusing on goals that may have been set aside during the busyness of the holidays. Between work commitments, family gatherings, and year‑end obligations, it is easy for important financial planning tasks to slip down the priority list. January, however, brings a natural sense of reset—and for many families, it is the ideal time to revisit unfinished items and put a solid plan in place.
One of the most common gaps we continue to see in otherwise well‑constructed financial plans is estate planning. It remains surprising how many individuals and families, even those with significant assets and complex financial lives, have little or no estate planning documentation in place.
Estate planning can range from relatively straightforward to highly sophisticated, depending on your circumstances and objectives. For that reason, working with a qualified estate planning attorney is always recommended. That said, there are several foundational elements that nearly everyone should address. As a practical way to start the year on strong financial footing, here are six issues every basic estate plan should cover.
Last Will and Testament
This is the cornerstone of any estate plan, yet it is still frequently overlooked. A properly drafted last will and testament allows you to direct how your assets will be distributed, name an executor to handle your affairs, designate guardians for minor children, and clearly communicate your wishes to loved ones.
If you pass away without a will, state intestacy laws dictate who inherits your assets and who may be appointed to administer your estate or care for your children. These laws vary by state and rarely align perfectly with what most families would choose for themselves. Having a valid will in place ensures those decisions are made by you—not by default statute.
Guardianship for Minor Children
For parents and caregivers, naming guardians for minor children is one of the most important—and most personal—decisions in an estate plan. While no one wants to imagine a situation where both parents are no longer present, planning for that possibility provides clarity and protection if the unthinkable occurs.
Guardianship designations are typically addressed within a will. Although these discussions can be difficult and may involve differing opinions between spouses or partners, addressing them proactively helps ensure continuity of care and avoids court involvement during an already traumatic time for surviving family members.
Powers of Attorney for Finances and Health Care
Powers of attorney authorize someone you trust to act on your behalf if you become incapacitated. Without these documents, loved ones may be forced to pursue court proceedings to gain authority to manage your affairs.
In most cases, there are two separate documents:
- Financial power of attorney, which allows a designated individual to handle matters such as bill payment, banking, and investment decisions.
- Health care power of attorney (or health care proxy), which authorizes someone to make medical decisions if you are unable to do so.
Though relatively simple to establish, these documents can be invaluable during periods of illness or incapacity, providing clarity and reducing stress for those stepping in to help.
Living Trust
A living trust is a legal arrangement that holds assets for your benefit during your lifetime and provides instructions for how those assets should be managed and distributed after your death by a successor trustee. While not everyone needs a trust, it can be an effective planning tool depending on your goals.
One of the most significant differences between a trust and a will is probate. Assets held in a properly funded living trust generally avoid probate, allowing for a faster and more efficient transfer to beneficiaries. Probate can take months—or longer—while trust administration often allows assets to be distributed in a much shorter timeframe.
Trusts also offer greater privacy. Probate is a public process, meaning estate details become part of the public record. Trusts, by contrast, are private documents.
From a tax perspective, today’s federal estate tax exemption is significantly higher than in past decades, meaning fewer families are subject to estate tax at the federal level. Nevertheless, high‑net‑worth individuals and families may still use trusts as part of broader strategies to manage estate taxes, address state‑level considerations, and achieve long‑term planning objectives. These issues should be reviewed with an experienced estate planning attorney.
Finally, trusts offer flexibility that a will generally cannot. They can include conditions on distributions, staggered payouts over time, or protections for beneficiaries who may need additional structure or oversight. This ability to tailor how and when assets are distributed is a key reason many families choose to incorporate trusts into their plans.
Beneficiary Designations
Retirement accounts and certain other assets pass according to beneficiary designations, not according to your will or trust. This makes regular review of these designations critical—particularly after major life events or after completing estate planning work.
Accounts such as IRAs, 401(k)s, and life insurance policies require current and properly structured beneficiary forms. Attorneys often provide guidance on how these should be coordinated with your broader estate plan, but the final step—updating the designations—must be completed by the account owner.
Organization and Communication
The final component of a basic estate plan is one that often receives too little attention: organization. Having documents in place is only helpful if your loved ones know they exist and can locate them when needed.
All estate planning documents should be stored in a secure but accessible location, and trusted individuals should know where to find them. While discussing these matters can feel uncomfortable, clear communication in advance can spare family members significant confusion and distress later.
Although this list is not exhaustive, addressing these foundational items goes a long way toward strengthening your overall financial plan. As the new year begins, taking time to establish—or update—your estate plan can provide peace of mind and ensure that your affairs are handled according to your wishes, rather than by default rules, when it matters most.
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