A shocking 56% of Americans have no estate plan at all, according to a new survey from the senior-living referral service Caring.com. Either they assume it’s too complex, too expensive or they don’t want to think about their own death.
“But estate planning isn’t about death,” points out estate-planning attorney Michael Gilfix, JD. “It’s about control and determining what happens to your money, property and responsibilities when you die or become unable to manage them yourself.” Without an estate plan, those decisions are left to state law and courts…and what they decide may not match your wishes or your family’s needs.
Bottom Line Personal asked Gilfix to review the most important estate-planning tools everyone should have to help reduce stress, court costs and taxes…
Who Needs Estate-Planning Tools?
Estate-planning tools aren’t just for wealthy or elderly people. Although the complexity varies depending on your life stage, assets and family circumstances, almost everyone benefits from some level of estate planning, including…
People with modest homes and retirement accounts. Without an estate plan, your family could wait months, even years, for probate, a public and costly court-supervised process to settle a deceased person’s estate, before they get their inheritances.
Unmarried partners and blended families. “State laws don’t automatically protect partners who aren’t legally married,” says Gilfix, “Plus, default inheritance rules can unintentionally exclude people for whom you want to provide.”
Reality check on costs: You can fill out and file many basic estate-planning documents using free or low-cost online forms and legal documents, such as Nolo.com and LegalZoom. Having an attorney vet your documents for accuracy or write up a simple will typically costs $1,000 to $2,000. If you have a more complex financial life with significant assets, multiple properties and special family considerations, the costs may be much higher—$10,000 and up.
Core Estate-Planning Tools
Last will and testament
This legal document details what you want to happen to your money, real estate, personal property and responsibilities after you die. A basic will covers distribution of your assets…appointment of an executor to carry out your instructions…and guardianship of children. Biggest disadvantage of wills: They are subject to probate.
If you don’t have a will when you die, it is known as dying “intestate,” and your state’s intestate laws will determine who inherits the assets in your estate.
Insider tips…
Don’t underestimate the emotional value of personal items. “Some of the biggest family conflicts erupt over items that have little monetary value but huge sentimental worth,” says Gilfix.
Living revocable trust
This is a legal arrangement that transfers ownership of some or all of your assets into a trust during your lifetime. You still maintain full control of those assets, and you act as the trustee of the trust and can change or cancel it at any time while you’re alive. When you die, this revocable trust automatically becomes irrevocable and cannot be changed. A successor trustee manages and distributes the assets. You can leave the trustee detailed instructions about the amount and timing of distributions to your heirs. Big advantage of a trust: Assets are not subject to probate and pass directly to your beneficiaries upon your death.
Insider tips…
You are still responsible for paying taxes while you are alive on any income derived from assets in the trust. The IRS typically treats the assets as belonging to you, and you report the income on your personal tax return.
This trust does not protect your assets from your creditors or lawsuit judgments against you.
Advance directives
Advanced directives are anumbrella term forlegal documents that let you appoint your health-care agents and convey your wishes about medical care in the event that you can’t communicate them yourself (perhaps you are unconscious or seriously ill). The most critical advanced directive is known as a “living will,” and it focuses on specific treatments such as the use of feeding tubes or resuscitation in end-of-life or life-support situations
Insider tip,,
Make sure your advance directives are accessible. A living will is useless if no one can find it. Keep copies in a known location at home…with your health-care proxy (the person you designate to carry out your health-care wishes)…and with your primary-care provider (ask him/her to add it to your medical records).
Power of Attorney (POA)
POA is a legal document that gives someone you trust the authority to act on your behalf in handling certain matters such as your money and legal affairs. The person you choose is called your “agent” or “attorney in fact” and is legally required to act in your best interest. A POA can give the agent broad authority to act on your behalf for most of your personal matters or just specific tasks and time periods. Signing a POA does not strip away your control, legal rights or ownership.
Insider tip…
Make sure your POA is “durable.” Unlike a general POA, a durable POA ensures that your agent can act on your behalf if you become disabled or mentally incapacitated (e.g., dementia, a coma). Without the “durable” designation, a POA automatically terminates if you become incapacitated, often forcing your family to go to court to establish guardianship or conservatorship. A “standing” durable POA becomes active immediately…a “springing” POA activates only when you are incapacitated.
Most common types of POA…
Financial POA gives your proxy authority over money matters such as paying bills, filing taxes and buying/selling property.
Health-care POA allows your proxy to make medical decisions for you if you can’t do so yourself, including consenting to treatments and deciding on surgeries, medication and life support. A health-care POA is meant to work alongside your advanced directives. “Your proxy is required to follow your documented wishes,” says Gilfix, “but he/she is also empowered to make decisions in real time if unforeseen circumstances or grey-area situations arise.”
Additional Estate-Planning Strategies
Beneficiary designations
Beneficiary designations are forms you fill out with the financial institution(s) handling your retirement accounts (such as 401(k)s and IRAs), annuities and life insurance policies. You choose who you want to inherit the assets in the account or the policy upon your death. Designations are very powerful—not only do they avoid probate, but they override any conflicting wishes in your will.
Transfer-on-Death (TOD) accounts are a simple, free way to pass on assets in bank and brokerage accounts directly to beneficiaries when you die without going through probate. You retain full ownership and control of your account while you are alive, and your beneficiaries have no access to it until you die. Beneficiaries become owners upon submission of certified death certificates.
Gifting strategies are ways to transfer assets during your lifetime to reduce the size of your taxable estate, achieve eligibility for government benefits and help your family and friends now. Most common gifting strategies…
Give a gift up to your annual exclusion limit. For 2026, the IRS allows you to gift as much as $19,000 ($38,000 for couples) per recipient to as many individuals as you want without triggering gift taxes. If you gift more than those limits, the excess amount reduces your lifetime gift and estate-tax exemption ($15 million per individual), meaning that you likely owe no immediate taxes. Any amount in your estate over the $15 million threshold upon your death is taxed at an 18% to 40% rate, with 40% applying when the unprotected value exceeds $1 million. You also can gift investments such as stocks. For capital-gains tax purposes, the recipients of stock gifted while you’re alive receive your original cost basis of the stock through something called carry-over. Inherited stock gets a step-up in basis when the stock is sold—that is the fair market value of the stock on the date of your death.
Insider tips…
If you give appreciated assets away, the recipient takes your cost basis. The step-up is lost because the assets are not in your estate when you die.
Avoid gift taxes by paying tuition or medical expenses directly. There is no limit to how much you pay or for how many individuals as long as the payment is made directly to the school or medical provider.
Advanced trusts
More advanced trusts, also known as irrevocable trusts, allow you to remove money from your estate for estate-tax purposes, lower your taxes while you are alive, and protect assets in the trust from divorce or creditor-related lawsuits. Important consideration: Once an irrevocable trust is created and funded, you completely give up ownership of the assets and cannot change the rules of the trust or take back the assets. Four types of popular irrevocable trusts…
Dynasty Trust is designed to hold inherited assets to protect the assets from divorce and litigation and from inclusion in the inheritor’s estate. How it works: You leave bequests in your revocable trust to this trust or make gifts into the trust while living. The assets can then be invested and used for the benefit of your child. Note that the length of time a dynasty trust is allowed to last depends on state law.
Special Needs Trust holds assets for a child or other family member who is disabled and cannot make a living. Assets in a Special Needs Trust do not interfere with eligibility for needs-based government programs such as Medicaid and Supplemental Security (SSI). How it works: You leave any bequest for the disabled child to this trust, not to the child directly. Trust assets are used to supplement government benefits for the beneficiary’s quality of life.
Grantor Retained Annuity Trust (GRAT) is used to transfer super-normal expected investment growth to beneficiaries with little or no gift-tax cost. How it works: You transfer assets you expect to appreciate quickly—such as tech stocks or pre-IPO company shares of property—for a set term, typically two to five years. Over that term, the initial transfer plus interest is returned to the grantor in the form of annuity payments. At the end of the GRAT’s term, any appreciation of the asset remaining in the trust pass to your beneficiaries free of gift and estate taxes.
Spousal Lifetime Access Trust (SLAT) isdesigned to remove assets from your taxable estate while still allowing you some indirect access to them through your spouse. How it works:Your spouse is the beneficiary of the asset you transfer into the trust. He/she can receive income from the trust as well as distributions for health, education, maintenance and support. If a third party is the sole trustee, distributions can be more liberal, such as distributions for the beneficiary’s comfort and happiness. While you cannot benefit directly from the trust, you get back-door access from any money your spouse spends on your joint home or household budget.
How to Choose the Right Tools for Your Needs
“Choosing estate-planning tools,” says Gilfix, “comes down to matching your goals, family situation and assets to the right level of control, complexity and protection.” Three key questions to consider…
What do I want to happen to my money/property/belongings/assets when I die?
Do I face significant tax issues?
What happens to my estate and my life if I am incapacitated?
Common Mistakes to Avoid
Forgetting that estate planning is also state-dependent. Example: Various states may have different rules on probate, different thresholds for state estate taxes, and varying legal procedures for trusts.
Not funding a trust. “This seems obvious,” says Gilfix, “but many people create a trust, then fail to transfer all the assets they should into it.”
Picking the wrong executor of your will, trustee of your trust or POA agent. Many people assume their spouse or eldest child should fill these roles. But consider the capability of the person you select, as well as whether he/she has the time, willingness and temperament to take on the role.
Assuming you can “set it and forget it.” Estate-planning tools are not static. Review them at least once a year to make sure they reflect your current relationships, match your financial goals and accommodate major changes in your life such as marriage, divorce, the birth of a child or grandchild, the death of a beneficiary or a move to a new state.
Bottom Line Personal interviewed Michael Gilfix, Esq., partner with Gilfix & La Poll Associates LLP, Palo Alto, California, and fellow of the National Academy of Elder Law Attorneys. He is author of Beat Estate Tax Forever: Planning for Future Generations. Gilfix.com
