What is an estate plan?

Estate planning is just a fancy legal-ish word for what you want to happen to your money and your stuff if you die or become disabled.

Your will is a big part of estate planning. But there’s a whole lot more to think about, like figuring out what type of will you need or if you need a trust. Plus, you need to decide which people you want to handle your estate, get your stuff, and take care of your kids and pets. Not to mention, you need powers of attorney to make medical and financial decisions for you (in case you lose the ability).  
 
Yeah, it can seem complicated. But that’s why we created this guide. It’ll break down the big stuff into bite-sized pieces so you can start your estate plan with confidence.

Why do I need an estate plan?

Having a solid estate plan in place is a big deal. Why? Because if you die without a will (or a complete estate plan), the court gets to make decisions for you. That can include putting someone in charge of handling your estate, deciding who gets your stuff, and picking caregivers for your children or pets. Don’t you want to have full control over those decisions? We knew you did!

Taking the time to put your plan together also shows you care enough about your loved ones to look after them when you’re gone. And it can be a good way to minimize estate taxes. Plus, it gives you a legacy you can be proud of and peace of mind knowing the wealth you’ve worked so hard to build ends up exactly where you want it to.

Below, our friends from RamseyTrusted provider Mama Bear Legal Forms will walk you through why estate planning is so important.

When should I start estate planning?

If you’re 18 or older, you need an estate plan. Today. But it doesn’t have to be complicated. It can be as simple as taking a few minutes to create a will online and letting your loved ones know you’ve got one in place. That means no more excuses!

If you’re like most people, with a few kids and a house, you only need a will (which you can create online with attorney-built documents). You don’t need to meet with a lawyer unless there’s something complicated about your situation.

You need a trust (and only a trust) if you’re older, your kids are grown, and your estate is worth at least $1 million. This lets you avoid probate in a way that wills won’t allow.

If you have an estate that’s large or complex, plus dependents—you need a will and a living trust. (Your will fills in the guardianship gap of a trust.) If you do get both, don’t worry about them bumping into each other. They’re separate legal tools and (unlike siblings) they don’t usually have conflicts between them. If there’s a legitimate conflict, the trust overrides the will.

The most important thing to keep in mind is this: Everyone needs a will, but not everyone needs a trust. The main unique power of a will is the option to name a guardian for your children, while the main unique power of a trust is to skip probate.

What's in an estate plan?

Let the will experts from RamseyTrusted provider Mama Bear Legal Forms break down what you need to know.

A will is a legal document that puts in writing what you want to happen when you die. It outlines things like who you want to get your money and your stuff—and who should look after your kids and pets. There are several types of wills, but they all boil down to the same basic document.

A will can resolve issues as big as dividing the family farm among five siblings or something small, like making sure your nephew gets the pocketknife he admires.

Understanding the different types of wills doesn’t have to be confusing. We’ll break them down so you can make a smart choice and create a will that’s right for you. And it doesn’t have to be a painful experience—or an expensive one, either.

Types Of Wills

Simple Wills

A simple will covers the basics—without any fancy clauses or stipulations. Despite its name, you can do a lot with a simple will. You can declare how you want your stuff given away and who gets it.

You can also name a guardian for your kids and choose the person (called a personal representative or executor) who makes sure your will gets carried out. And you can even name the person you want to care for your favorite ferret. In other words, a simple will can cover a lot of ground.

Living Wills

Even though the names are similar, a living will is not a last will and testament. A living will is a document that explains your wishes for your end-of-life medical care if you can’t speak for yourself. (Unfortunately, it happens. And a living will makes your wishes clearer.)

This type of will lets you maintain control of your life and future even if you’re seriously injured or become terminally ill. Every state handles living wills differently, so make sure yours is done to match your state’s requirements.

Joint Wills

A joint will is a document created by two people who leave their stuff to each other. (Think husband and wife.) It’s just a single document that two people sign. In it, the couple agrees that when one spouse dies, the other inherits the whole estate. Pretty logical, right?

When the surviving spouse dies, their stuff goes to someone the couple named together. A mutual will does the same thing, only it involves two wills that both spouses sign.

But keep in mind—they can turn into a legal headache. A better option is a mirror will.

Mirror Wills

A mirror will includes two wills that are drafted almost identically, but they have different names as testators (the people making the will) and are signed individually.

Often, mirror wills state that the surviving spouse inherits the estate and cares for the kids, but other details may be different. Because mirror wills are actually two different wills, part of the estate can go to someone besides the surviving spouse. So you can leave the antique family brooch to your sister or cousin, and leave the rest of your stuff to your spouse.

The other advantage of a mirror will is that each spouse can make changes to their will whenever they need to without their spouse’s signature. This can prevent some serious issues, particularly after one spouse dies.

Holographic Wills

Nope, a holographic will wasn’t invented at a sci-fi convention. It’s a last will and testament that is written and signed by hand. Believe it or not, these wills are still around. People in life-threatening situations (a soldier in a combat zone, for example) may write one if they think they might not survive.

But not all states accept holographic wills as valid, so if you have one, make sure it’s accepted where you live. With today’s technology, it’s a whole lot easier to create a will online and save your family the possible heartache and frustration of an invalid will.

Nuncupative Wills

This is way simpler than the name makes it sound. It’s a last will and testament that’s spoken out loud instead of written down. This kind of will is made when the person making the will may pass away soon.

Nuncupative wills have rules that differ from state to state. In some states, the person stating their wishes has to be dying and it may only be valid if three or more people witness the person speaking. Sometimes, the nuncupative will has to be written down after being spoken, and other states won’t recognize a spoken will at all.

Deathbed Wills

A deathbed will is exactly what it sounds like—you create it if you’re facing certain death. You can write and sign it by hand, or you can type it out and sign it in the presence of witnesses. It sounds a lot like the holographic or nuncupative wills. The only real difference is that deathbed wills are typed.

The thing about deathbed wills is that they’re almost always written at times of very high stress for everyone involved. No matter how you create one, this kind of will can cause all sorts of problems. They’re often filled with errors because they’re written so quickly. And it’s harder to prove them as valid.

Read more about types of wills.

Who is involved in a will?

What happens if I don't have a will?

If you don’t make a plan for what happens to your belongings and beneficiaries if you pass away, the state will. Learn how you can take control of your legacy from Mama Bear Legal Forms, our RamseyTrusted wills provider.

Probate

Probate is the legal process that takes place after someone dies. It makes sure your property and possessions get to the right people, and any taxes or debts are paid in full.

How does probate work?

The probate court judge confirms that the will is genuine and authorizes the executor to carry out the wishes of the person who died. Then, the judge stays in touch with the executor to make sure everything gets done.

How long does probate take?

If there’s a will and no one tries to contest it, the average probate process takes six to nine months. But if there isn’t a will, the process could be much longer. Depending on how complex the estate is, you could be looking at several years.

Can I avoid probate?

Probate is necessary anytime someone dies, even if they had a valid will. So strictly speaking, you can’t skip probate entirely. But having the right pieces of your estate plan in place can help speed things up. In fact, a clearly laid out will (or living trust) can help speed probate way up and minimize its impact on the lives of your loved ones.

If you die without a will, the probate process kicks up a notch. First, the judge appoints an estate administrator. Then, they’ll work with the court to value the estate, find creditors and beneficiaries, and decide on a fair way to distribute your property.

Read more about probate.

State-Specific Requirements

States have different rules about how to handle a person’s passing. If your will doesn’t meet state-specific requirements, your personal representative might have trouble carrying out your wishes.

And that means your family could find themselves tied up in the probate process while the court decides how to fill in the gaps. It's much easier for your family if you go ahead and use a state-specific template or make your will within the legal requirements of your state.

Like a last will and testament—a trust is a written legal document. But unlike a will, it can go into action while you’re still alive. When a trust is formed, the person who owns the stuff (the grantor) transfers the ownership of their assets to the trust itself. The grantor then picks someone (a trustee) to carry out the instructions in the trust.

Some of the advantages include estate planning privacy, the ability to make conditions for who gets what, and skipping probate court. But if your will is clear and you don’t have a huge estate (or if you’re deeply in debt) probate won’t be a huge hassle. And you probably don’t need a trust.

And remember—a trust can’t name a guardian for your children. Only a will can do that.

Trusts come in lots of different forms—close to a dozen, in fact. We’ll cover the most common types in the following section.

Types of Trusts

Living Trust

The main purpose of a living trust is to give you more privacy around planning your estate than you can get from a will. Transferring your assets to this type of trust means you grant ownership to the trust while you’re still alive. It also spells out how to distribute your stuff after you pass away.

What’s the difference between a living trust and a will? Here are some key differences:

• A living trust helps you skip probate costs (but still comes with attorney fees). Any property given through a will is subject to probate. When handled through the living trust, it isn’t.
   
• A living trust is not a public document like a will. If you have nosy relatives who want to know how things were distributed, a living trust protects that information, unless you (or whoever is the trustee) share it.
   
• A living trust can’t appoint a guardian for your children. We mentioned it before, but this is a major detail. Only a will can name guardians. So, if you’re a parent, you definitely need a will (with or without a living trust).
   
• A living trust takes more time and money to set up. There’s more paperwork—and money—involved with a living trust compared to a will. The exact cost varies widely according to your location and your needs.

If you want to learn more about living trusts, you can head over to this handy article.

Testamentary Trust

A testamentary trust is a trust that’s written inside a will. It’s also called a will trust or a trust under will. Creative names, right?

A testamentary trust distributes all or part of your estate (your stuff) after you die, but the trust is not created until after you die. It’s different than a living trust, which is created while you’re still alive. You can create more than one testamentary trust within your will.

A testamentary trust is often used when you want to provide for a disabled relative or a minor, or if you want someone to receive their inheritance when they reach a certain age or milestone. Typically, the assets (money, jewelry, land, etc.) within a trust are held until a specific time—like a person’s 25th birthday or after their college graduation.

Since the testamentary trust is inside a will, it has to go through probate after you pass away.

And until the person (or people) named in the trust receive their inheritance, the trustee (person who carries out the trust) has to go to probate court every year to prove they’re taking care of your stuff as instructed and aren’t using it for personal gain. Those probate costs could add up over the years.

Revocable Trust

The revocable trust is by far the most common type of living trust. Just as the name hints, a revocable trust can be changed or revoked (canceled) by the grantor at any time. Doing this is not a quick job, but it can be done, which makes it a flexible option.

Irrevocable Trust

An irrevocable trust is active as soon as you make it and can’t be changed—even by the grantor (the person who sets it up). It takes a judge to decide whether a change can be made, and even then, the circumstances would have to be pretty special. Some people start off with a revocable trust, then convert it to an irrevocable trust later (when they’re more certain of things).

Who is involved in a trust?

Will vs. Trust

What’s the difference between a will and a trust? And which do you need? Let our friends from RamseyTrusted provider Mama Bear Legal Forms walk you through the basics so you can make the right call with confidence.

A letter of instruction (aka a letter of intent) is an informal document where you can provide personal instructions that aren’t included in your will. The letter of instruction has no legal authority, but it can make things easier on your family by explicitly stating your special wishes.

Because it’s not a legal document, you can write and update your letter of instruction however you want—it could even be handwritten on a piece of notebook paper. But make sure it’s easily accessible and someone like your executor knows where it is.

Wills and Trusts

Beneficiaries

A beneficiary is any person or organization (nonprofit or charity) you want to inherit your assets when you pass away. You’ll name them in certain legal documents, like a will, life insurance policy or trust.

Interesting fact: You’ll also name a beneficiary (not a guardian) for your pets. (We know pets are like family, but legally they’re considered your property.)

You can head over to this article to learn more about beneficiaries.

Medical Power of Attorney

Also known as a health POA or an advance directive, this document gives someone the ability to make certain medical decisions on your behalf. It’s usually created alongside your will.

If something happens that leaves you mentally unable to make decisions (like a brain injury), a medical power of attorney becomes the megaphone your family needs to speak into an urgent situation. Without it, their voice—and your wishes—might not be heard.

When you make a medical power of attorney, it lets you choose the person you trust to make those decisions.
 

Financial Power of Attorney

Just as a health care power of attorney names someone to make medical choices for you, the financial power of attorney names someone to make money decisions for you. Like the medical POA, it’s usually created alongside your will.

The most common use for a financial POA is during a medical emergency. When you’re in that kind of situation, your daily financial needs might not be top of mind. Someone still needs to pay your bills and manage your accounts—like paying your rent or house payment and insurance premiums.

Trusts

Trustee

A trustee makes sure the instructions in a trust are carried out (like the executor for your will). You could choose a relative—or even yourself. Or you could appoint a professional trustee (usually from a financial institution).

Unlike an executor, the trustee’s job is usually ongoing, so it can be a pretty big responsibility. Consider someone who has the time and ability to properly manage the trust.

Successor

This is the person who takes over as trustee if the original trustee dies or becomes incapacitated.

Wills

Guardians

If you have children younger than the age of 18 (also known as minors), you need to name a guardian for them in your will. A guardian will get legal custody of your kids and your kids’ property if you’re not around.

Kind of hard to think about, isn’t it? But hey, this is a big (and necessary) decision. Make sure you decide on someone you trust and someone you believe can take on that kind of responsibility. Then remember to talk it over with that person before naming them in your will.

Warning! If you don’t name a guardian for your children in your will, a probate court will decide that for you—and that’s just not right! No one wants a court to decide something as important as guardianship for children.

Executor of Estate

Your will’s executor (aka personal representative) is the person who carries out the wishes in your will when you’re gone. Your executor will also manage the probate process, get stuff to your beneficiaries, and oversee other duties that require honesty and integrity.

Be sure to pick the right person for the job, someone who can follow your will carefully and responsibly—without getting a lawyer involved. That’s the goal!

You can read more about executors in this article.

 

Liquid Assets

Physical Assets

What Happens if You Don't Make a Plan?

Before You Make Your Plan

List the people you need to talk to.

Start with the person you’ll do your estate planning with. That’s your spouse or someone you trust if you’re single. Together, you’ll choose the people you’re going to ask to fill a role in your plan. You may also need to talk to people who don’t get a vote but will be affected by your will, like your kids, beneficiaries and extended relatives. 

Think about your relationship with each person.

Can you talk to them easily, or do you tend to argue? Do you have a relative who’s a little too loud about their (unwanted) opinions? Well, they’re still family—and you may have to talk to them about your estate plan. Think about why past conversations have gone well or poorly. With these things in mind, you can plan for risks, take steps to minimize conflict, and set healthy boundaries to protect your decisions—not to mention your sanity.

Write out your thoughts.

It may sound cheesy, but doing this ahead of time will help you stay focused and calm during the conversation. Write down specifics, like what role you want your loved one to play in your end-of-life wishes (and why). Remember, this is a tough topic for them too, so it helps to think about how you’d want to hear this information if you were in their shoes.

Create a safe space.

Do your planning in a comfortable, private space where you can think—like your favorite room, outdoor area or coffee shop. And when it’s time to talk, choose a spot where you and your loved one both feel comfortable. If it’s with someone you’re close to, you could do this at home. Consider a neutral place, like a restaurant, if the relationship is strained.

Set up meetings with those involved.

Let’s be clear: This will take more than one conversation. You’re trusting your loved ones with sensitive information about what’s most important to you, so this isn’t the time to put everybody in a room and bombard them with your plans. You and your spouse should plan your will privately—no kids or in-laws allowed!

When you ask someone to fill a role, meet with one individual or married couple at a time so they can respond and ask questions in a low-pressure setting. Then, after everything’s final, consider small group meetings or even a live reading of the will to tell your kids, beneficiaries or other relatives about the details.

How to Ask Someone to Help Carry Out Your Estate Plan

Come prepared.

You already did the hard work of planning this conversation. Bring those notes along when you talk to your loved one so you can remember everything you want to say and keep the conversation on track.

Be present.

When you’re having an important conversation, it’s always a good idea to cut out distractions. Meet face-to-face so you can look your loved one in the eyes and interact. Silence your phone—or even turn it off—so there are no interruptions. And whatever you do, don’t talk about your will over text or email. It’s just too easy to misread intentions that way.

Ask for what you want.

Here’s some breaking news: Your friends and family can’t read your mind. So, when you ask them to fill a role in your will, be direct and kind. You might say, “I’m planning my will, and I’d like you to be my personal representative.” With simple statements like that, there’s no room for confusion.

Give them a reason.

You’re asking someone to take on a big responsibility—so there’d better be a good reason. Is it because they’re responsible? Trustworthy? Do they know you best? Do you think they’d raise your kids the way you want? Whatever it is, tell them! It’ll help them understand why they’re qualified for the role you want them to take. And they’ll feel loved hearing why you think they’re so awesome.

Use “I” statements.

Your words can make a loved one feel valuable and free to choose what they think is best. Or they can send that person on a guilt trip. Using “I” (or “we”) statements is the best way to avoid those hard feelings because they take the pressure off your loved one and still let you speak your mind.

So instead of, “You have to be the kids’ guardian. You’re the only person we trust to do it!” try, “We really trust you, and the kids love you. We’d like to make you their guardian in our will. Will you consider that?”

Ask about their questions and concerns.

Some people may not volunteer their opinions right away, so ask them to. Then sit back, look into their eyes, and listen. They might not know a personal representative is responsible for making sure everyone else follows the instructions in your will. Or they might travel too much to take care of your dog. Whatever they say, thank them for sharing. And treat their concern like it’s valid—because it is.

Give them time to think.

You’ve thought a lot about your will. But your loved one hasn’t. Since what you see as a carefully planned conversation is a surprise to them, they may need time to decide if they want the role. Agree on a deadline for that decision—then leave them alone until then. The last thing you want is to pressure them into a role they shouldn’t fill.

Respect their no.

Sometimes the person you think is best for a role may say no, and that’s okay! You want people who are prepared and committed to help carry out your will. Instead of trying to change their mind, thank them for considering your request. And if you trust their advice, ask who they think would be a good option—they might think of someone you didn’t.

Where to Store Your Plan

Store it in your legacy drawer.

What is a legacy drawer? It’s a special place to store the important documents your family needs if something happens to you.

First things first. We do live in a digital world. So, it’s possible that your legacy drawer won’t be an actual drawer in your home. It could be online, and that would make perfect sense. But whatever you choose—make sure whoever needs access has it.

Whether you go real or digital, your legacy drawer should include:

• Will and estate plans
• Your ID
• Passwords
• Marriage (and other) certificates
• Financial account information
• Funeral instructions
• Insurance policies
• Other important documents

Remember—having your legacy drawer set up eliminates a whole lot of added stress and confusion at a time when tensions are already running high.

You can find even more tips for your legacy drawer in this article.

Give copies to your executor or trustee.

Whether you have a will or a trust—it’s always a smart idea to share a written copy of your estate plan with the person who will be responsible for carrying it out. It helps them get prepared before they have to take action. If you make a copy of your will, remember—only your original (signed) document will be legally binding. 

Communicating Your Plan

Thank the people involved.

The people who said yes to helping carry out your end-of-life wishes agreed to sacrifice their time, emotions and money if you pass away. Even if they never become your child’s guardian or have to make a difficult decision as your power of attorney, they still felt the pain of imagining what that would be like—and they still said yes. That’s something to be grateful for.

And even though it stinks if someone declined a role, you’ve still got something to be grateful for. They said no to something they didn’t think they could do well. That’s called honesty, and it’s the backbone of good relationships. And because of that, you were free to build the right team of people to help carry out your wishes.

Give instructions to the people who said yes.

We don’t want to blind you with the obvious, but here it is: Your loved ones need instructions on how to fill the roles they accepted!

Personal Representative

Your personal representative manages the process of carrying out your will—so they need to know where your will is. Remember the legacy drawer we mentioned earlier (where you’ll store all your important legal documents)? Tell your personal representative where those documents are and how to access them.

You should also write your personal representative a letter of instruction that includes contact information for guardians, powers of attorney, beneficiaries, financial advisors and anyone else whose help they might need.

Guardians

You should give your child’s guardian (or guardians) a copy of the will and a letter of instruction that includes important information about your child, like their medical history, allergies and some of their favorite things. Then write one more letter—to your child. Tell them how much you love them and anything you want them to know.

And remember—pets get a beneficiary, not a guardian. We’re mentioning that person here because you’ll connect with them and give them care instructions like you would with guardians.

Medical Power of Attorney

If your medical (or health) POA has to make a medical decision for you during an emergency, they’ll need to access this legal form fast. That’s why they should have their own copy of the form (and know how to access your copy in case theirs gets lost or destroyed).

Financial Power of Attorney

Your financial POA should know where and how to access your financial information. But don’t give your account numbers, PINs or other details to anyone other than your spouse. Even though you trust this other person, you don’t want your financial info floating around where it could fall into the wrong hands. You just want your power of attorney to have access to your account information if they need it.

The one thing you can—and should—give them is a copy of the form naming them as your financial power of attorney.

Talk to your kids.

The last thing your kids need is to lose you and wonder where they’re going to live. Tell them who their guardian is so they can have certainty in a scary time. But keep this conversation age-appropriate.

For young kids, you might say, “Mommy and Daddy love you, and we want to make sure you’re always safe. If something ever happens to us, Uncle John and Aunt Jo will take care of you. But don’t worry, because we’re planning to be around for a long time.”

For older kids, you can go into more detail about what a will is and why it’s important. You may even tell them it’s something they’ll need to do when they turn 18. But even your teen will need plenty of reassurance that your will is a precaution—not a sign that disaster is at hand.

This is one of the most important conversations you’ll have about your will, so talk to your spouse first. When you’re both on the same page, it’ll be easier to help your kids feel safe and loved.

Talk to your beneficiaries and other relatives.

After your will is signed and notarized, it’s not a bad idea to do a live reading. That’s when you gather your loved ones and read your will to them while you’re still alive. When you tell your loved ones what’s in the will, there won’t be any unpleasant surprises after your death. Instead, you’ll set clear expectations for them while you’re alive, and they can process their emotions better when they’re not grieving.

But let’s be real: A live reading of your will might cause some conflict. If your sister-in-law is your kid’s guardian, your parents may get upset that you didn’t pick them. If you’re not giving your nephew any money because he’s making bad life choices, he’s probably going to get mad. We’ve all got a relative who’s a travel agent for guilt trips. So you’re going to have to be strong and say, “I’m sorry you feel that way. But this is my decision, and I’m going to stick to it.”

Setting firm boundaries like that can be hard. But it’s better to face this conflict now—when you’re here to deal with it—than to leave your loved ones fighting off Irrational Irene in a courtroom after you’re gone. Plus, a live reading of your will can actually lead to good things too. It brings you together with the people you care most about—and gives you a chance to tell them how much you love them.

Because at the end of the day, that’s why you’re making a will. You love these people, so you want to protect them with a rock-solid plan for the future.

How to Keep Your Plan Up-to-Date

When to update your estate plan.

Having an estate plan in place is a smart move and shows your loved ones you care. But you can’t predict all the twists and turns your life could take. And that’s why you need to keep your will up-to-date.

But when and why should you revise your will? There are eight major times when your will needs a makeover:

• Getting married
• Getting divorced
• Having a child
• Children growing up
• Losing someone close to you
• Changing assets
• Moving to a new state
• Changing your mind

How to communicate the changes.

Remember all the people you named in your estate plan? You know—your beneficiaries, guardians and everyone else we covered in the guide? Whenever you make a change that affects one of these people, you should let them know. It sets clear expectations—and keeps everyone on the same page when your estate plan goes into action.