Estate Planning Basics: Why It Matters and Where to Start

Shannon Avery & Kolby Madsen – Partners | Wealth Managers

Most people start thinking about their financial future early in their careers, especially when it comes to retirement planning. Saving for life after work is a common goal, often supported by employer-sponsored
plans like 401(k)s. But what many overlook is the importance of estate planning, not just for the ultrawealthy, but for everyone.

Estate planning isn’t just about what happens after you’re gone; it’s about protecting your loved ones,
clarifying your wishes, and avoiding unnecessary costs and delays.

Here’s a breakdown of the key components and why each one matters:

1. Beneficiaries: Your First Estate Plan

The most basic (and often most overlooked) form of estate planning is naming beneficiaries on your financial accounts, like retirement plans, life insurance policies, and bank accounts. This designation informs the institution of who should receive your assets in the event of your passing.

Key Points:

• It overrides your will or trust. Whatever is written on the account wins.
• It’s legally binding. Updating it is crucial when life changes, such as marriage, having children, or going through a divorce.
• It’s fast and avoids probate. Money goes directly to the person listed.

2. Wills: Your Wishes in Writing

A Last Will and Testament is a legal document that outlines how you wish to distribute your assets after your passing. It also allows you to name guardians for minor children and an executor to manage your estate.

What a Will Does:

• Specifies who gets what.
• Speeds up the probate process (but doesn’t avoid it).
• Provides legal clarify for your family.

Tip: Make it a habit to review your beneficiary designations annually or after major life events.
Keep in mind: A will must go through probate, a court-supervised process that can be time-consuming and public.

3. Trusts: More Control, Less Court

A trust is a legal arrangement that allows a third party (the trustee) to hold and manage assets on behalf of your chosen beneficiaries. Trusts can be designed to fit a wide range of goals and offer benefits that go beyond a will.

Why Use a Trust?

• Avoid probate for assets placed in the trust.
• Provides privacy — unlike wills, trusts aren’t public.
• Offers control — you can dictate how and when assets are distributed.
• Can reduce taxes if structured as an irrevocable trust.
• Protects assets from creditors or poor money management by heirs.

4. Powers of Attorney (POAs): Planning for the Unexpected

A Power of Attorney (POA) is a legal document that gives someone you trust the authority to act on your
behalf if you’re unable to manage your affairs due to illness, injury, or absence.

There are two main types:

• Financial POA – Manages money, bills, and property.
• Healthcare POA – Makes medical decisions if you’re incapacitated.

Why a POA Matters:

• Prevents the need for a court-appointed guardian.
• Ensure that your wishes are followed in the event of an emergency.
• Reduces family conflict by clearly naming your decision-maker.
• Offers peace of mind for you and your loved ones.

5. Living Will / Advance Healthcare Directive

A Living Will (or Healthcare Directive) outlines your medical wishes if you’re unable to speak for yourself. It often works alongside your Healthcare POA.

Examples of what it covers:

• Life support preferences
• Organ donation
• Pain management

This document gives clarity and relief to your loved ones during emotionally difficult times.

Getting Started: Who Can Help

Estate planning can be complex, but you don’t have to figure it out alone. Professionals, such as estate
planning attorneys and financial advisors, can help you select the most suitable tools and structure for
your unique situation.

Tips:

• Ask trusted professionals for referrals.
• Ensure your plan accurately reflects your current life, assets, and state-specific laws.
• Review and update your plan as life changes.

Final Thought

Estate planning isn’t just for the wealthy; it’s for everyone who wants a say in what happens to their assets, loved ones, and care when they’re no longer able to decide for themselves. Whether you start by naming a beneficiary or drafting a full estate plan, acting now ensures your legacy is protected and your family is supported.