Estate Planning

Estate Planning for People Who Aren't Rich

8 min read

Ask someone why they haven't done their estate planning and you'll usually hear some version of "I'm not rich enough for that." It's the most persistent myth in personal finance, and it's also the most dangerous. Estate planning is not about minimizing estate tax — it's about answering the questions your family will face if you die or become incapacitated. Who raises your kids? Who pays your bills? Who decides whether to keep you on life support? If you don't answer these questions in legal documents, a court will answer them for you, and its answers may have nothing to do with what you would have wanted.

No matter what your net worth is, if you're an adult, you need an estate plan. Here's what that actually means, document by document, and how to get it done.

What Happens If You Die Without a Plan

Dying without a will — known legally as dying intestate — is not a romantic act of rebellion. It's a decision to let the state you live in decide who gets your assets and who raises your children, based on a one-size-fits-all formula written by legislators who have never met your family.

Every state has intestacy laws. They're broadly similar: a surviving spouse typically gets everything if there are no children, or splits assets with children if there are. An unmarried partner gets nothing — zero — regardless of how long you've been together. Your parents or siblings inherit before your partner does. If you have minor children and no surviving spouse who is their other legal parent, a judge who has never met your kids or your family will decide who becomes their guardian. That decision will be based on who petitions the court, not on who you would have chosen.

Intestacy also means your estate goes through probate — the court-supervised process of validating a will, paying debts, and distributing assets. Even without a will, probate is required. Someone must petition the court to be appointed as administrator of your estate, and the court supervises every step. This takes time (6 to 18 months minimum in most states), costs money (court fees, administrator bond premiums, and attorney fees that typically run 3% to 7% of estate value), and creates stress for your loved ones at the worst possible moment. Probate is also public record. Anyone can look up what you owned, who you owed, and who inherited it.

The documents described below prevent all of this. They're not expensive relative to the cost of not having them.

1. Last Will and Testament — The Foundation

A will serves three primary functions: it names who gets your property, it names the person who will manage the process (the executor or personal representative), and it names a guardian for your minor children.

What a will does: A will controls the distribution of assets that go through probate. This includes bank accounts in your name alone, personal property (cars, furniture, jewelry), real estate titled in your name alone, and business interests. It does not control assets that pass by beneficiary designation (life insurance, retirement accounts, transfer-on-death accounts), assets held in a trust, or jointly titled assets with rights of survivorship. This is a critical distinction that many people miss — your will could say "everything to my sister," but if your 401(k) beneficiary designation still names your ex-spouse, the ex-spouse gets the 401(k) regardless of what the will says.

Choosing an executor: Your executor is responsible for filing the will with the probate court, inventorying your assets, paying your final bills and taxes, and distributing what's left to your beneficiaries. It's a significant administrative burden that can take a year or more. Choose someone organized, responsible, and geographically close enough to handle practical matters (cleaning out your home, selling your car). You can name a backup executor. You can also specify that the executor is entitled to reasonable compensation from the estate — in many states, executor fees are set by statute as a percentage of estate value.

Guardianship of minor children: This is the most important decision in your will if you have kids under 18. The guardian you name will raise your children if both parents die. Think about values, parenting philosophy, religion, and whether the guardian has the financial and emotional capacity to take on your children. Have a direct conversation with your chosen guardian before naming them. Name a backup. Without this designation, your children could end up in foster care temporarily while relatives argue in court over who gets custody.

Cost: A simple will drafted by an estate planning attorney typically costs $500 to $1,500 for an individual, or $800 to $2,500 for a married couple with mirrored wills. Online services like LegalZoom or Trust & Will charge $100 to $400. DIY will kits from office supply stores cost $30 to $70 but are more prone to execution errors that can render the will invalid. The single most common mistake is improper witnessing — most states require two disinterested witnesses (people who are not beneficiaries) to sign the will. If the witnesses are beneficiaries, their inheritance may be voided.

2. Revocable Living Trust — Avoiding Probate

A revocable living trust is a legal entity that holds title to your assets while you're alive and distributes them after your death — all without going through probate. You create the trust, name yourself as trustee (so you retain full control), transfer assets into the trust (called "funding" the trust), and name a successor trustee who takes over when you die or become incapacitated.

How a trust avoids probate: Because the trust — not you — legally owns the assets, there's nothing for the probate court to administer. The successor trustee simply follows the trust's instructions, paying debts and distributing assets according to your wishes. This happens privately, with no court filings, no public record, and usually much faster than probate.

Funding the trust: Creating the trust document is step one. Step two is re-titling your assets into the name of the trust. That means retitling your house deed, your non-retirement brokerage accounts, your bank accounts, and possibly your car. If you forget to transfer an asset, it passes through probate anyway — so funding is not optional. An unfunded trust is an expensive piece of paper.

Who needs a trust: A trust is most valuable if your estate exceeds roughly $200,000 to $300,000, if you own real estate (especially in multiple states, which would require ancillary probate in each state), if you have a blended family (children from a previous marriage plus a current spouse), or if you value privacy. It's also essential if you want to control when beneficiaries receive their inheritance — for example, holding assets until a child turns 25 or 30 instead of distributing everything at 18.

Who doesn't need a trust: If you're young, single, without children, and your total assets are under $100,000, a will plus beneficiary designations is likely sufficient. You can always add a trust later.

Cost: An attorney-drafted revocable living trust typically costs $1,500 to $5,000 for an individual, $2,500 to $7,000 for a married couple. Online services offer trusts for $400 to $1,000. The attorney route is strongly preferred for trusts because funding mistakes are common and online services provide little guidance on the most important step.

3. Financial Power of Attorney — Managing Your Money When You Can't

A financial power of attorney (POA) authorizes someone you name (your agent or attorney-in-fact) to manage your financial affairs: paying bills, filing taxes, managing investments, selling property, accessing bank accounts, and handling insurance claims.

Durable vs. springing: A durable POA takes effect immediately upon signing and remains effective if you become incapacitated. That means your agent can act on your behalf even while you're still competent — which is the point, because you might need help before you're fully incapacitated. A springing POA only takes effect upon your incapacity, as certified by one or two physicians. While the springing design sounds appealing because it preserves your autonomy longer, it creates practical problems: doctors may be reluctant to declare incapacity, the delay can prevent your agent from paying bills on time, and financial institutions are sometimes skeptical of springing POAs. Most estate planning attorneys recommend the durable version.

What powers to grant: Your agent should have broad authority to handle taxes, banking, real estate, and investments. Without a POA, your family would need to petition a court for a conservatorship or guardianship — a costly, public, and slow process that subjects your finances to ongoing court supervision. Conservatorships typically cost $2,000 to $5,000 just to establish and several hundred dollars per year thereafter in court reporting requirements.

Choosing an agent: Your agent should be someone you trust absolutely — honesty is the only qualification that matters. The POA gives them access to literally every financial account you own. Proximity matters too; someone living nearby can handle practical needs more easily. Name a successor agent. If you're uncomfortable giving immediate access, many attorneys draft POAs that are signed but held by the attorney and delivered only upon incapacity — though this delays access and isn't as clean as the durable approach.

4. Healthcare Power of Attorney and Advance Directive

These are sometimes combined into one document and sometimes split into two. Either way, they cover who makes medical decisions and what decisions they should make.

Healthcare power of attorney (healthcare proxy): Names someone to make medical decisions on your behalf if you cannot communicate or are otherwise incapacitated. Your agent can consent to or refuse treatments, hire and fire doctors, access your medical records, and make end-of-life decisions. Choose someone who understands your values, can handle pressure from doctors and emotional family members in a crisis, and lives close enough to be at your bedside when it matters.

HIPAA release: A separate authorization that allows your named agents to access your medical records. Without it, healthcare providers may refuse to share information with your agent due to privacy regulations — even during an emergency. Many estate planning attorneys include a HIPAA release within the healthcare POA or as a standalone document.

Living will (advance directive): States your preferences about life-sustaining treatment: whether you want CPR, mechanical ventilation, dialysis, artificial nutrition and hydration, and tube feeding. It only applies when you have a terminal condition or are in a persistent vegetative state and cannot communicate your wishes. Without a living will, your family must guess — and families frequently guess wrong, or disagree entirely, leading to painful conflicts in hospital waiting rooms.

POLST (Portable Orders for Life-Sustaining Treatment): Distinct from a living will, a POLST is a physician-signed medical order — not just a statement of wishes — that travels with you. It's appropriate for people with serious illness or advanced age and translates your wishes into actionable medical orders that EMTs and hospital staff must follow. A living will expresses preferences; a POLST is a doctor's order.

Choosing a healthcare agent: Your spouse is the natural choice for most people, but consider whether they can actually make hard decisions under extreme emotional duress. If your spouse would be too distraught to authorize pulling a ventilator, name someone else — a sibling, an adult child, or a close friend — as backup. The agent's job is to carry out YOUR wishes, not their own preferences, so choose someone who respects your autonomy even when it's hard.

5. Beneficiary Designations — The Documents That Override Your Will

Beneficiary designations control assets that pass outside of probate, including retirement accounts (401(k), IRA, 403(b)), life insurance policies, annuities, and transfer-on-death (TOD) or payable-on-death (POD) accounts. These designations override whatever your will says. If you name your brother as beneficiary of your IRA and your will says everything goes to your spouse, your brother gets the IRA, period.

Periodic review: Beneficiary designations should be reviewed after every major life event — marriage, divorce, birth of a child, death of a beneficiary, or a falling out. They should also be reviewed periodically even without life events, because people forget what they filled out on a form 15 years ago. The most common estate planning disaster is an ex-spouse receiving a 401(k) because the account owner never updated the beneficiary designation after divorce. The SECURE Act of 2019 and SECURE 2.0 Act of 2022 significantly changed how inherited retirement accounts are taxed, making beneficiary designations even more consequential. Most non-spouse beneficiaries must now withdraw the full balance within 10 years, which can create large tax bills if not planned for.

Contingent beneficiaries: Always name a contingent (backup) beneficiary. If your primary beneficiary dies before you and you have no contingent listed, the asset goes to your estate — meaning it goes through probate and loses its creditor-protected status.

Digital Assets

Most estate plans don't address digital assets, and that's a growing problem. Your digital life includes email accounts, social media profiles, cryptocurrency wallets, online banking and brokerage logins, photo storage, domain names, and digital businesses. Without a plan, your executor or family may be locked out of everything — or worse, may be violating federal computer fraud laws by trying to access your accounts.

What to do: Maintain a password manager with a secure emergency access feature, or keep a written list of critical logins in a safe place your executor knows about. Many states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which allows you to designate in your will or trust who may access your digital accounts. Even so, the practical reality is that the terms of service of Google, Apple, Facebook, and other platforms control what happens to your data. Apple's Legacy Contact and Google's Inactive Account Manager features allow you to designate someone to access your account after death. Set these up.

Estate Taxes — Why Most People Don't Need to Worry

The federal estate tax exemption for 2025 is $13.99 million per individual ($27.98 million for a married couple with portability). The One Big Beautiful Bill Act of 2025 increased the exemption to $15 million starting in 2026 (indexed for inflation thereafter). This means fewer than 0.1% of estates will pay any federal estate tax.

State-level estate and inheritance taxes are a different story. Several states impose estate taxes at much lower thresholds:

Massachusetts and Oregon: $2 million exemption
Washington: $2.193 million (as of 2024, indexed for inflation)
New York: $7.16 million (as of 2025)
Connecticut, Maine, Minnesota, Vermont, Rhode Island, Illinois, Maryland, Hawaii, and the District of Columbia also have estate taxes with varying exemption thresholds

Six states impose an inheritance tax on the recipient (not the estate): Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Close relatives usually pay little or nothing; distant relatives and non-relatives pay the most.

If you live in one of these states and your net worth approaches the exemption threshold, a conversation with an estate planning attorney about tax-minimization strategies (credit shelter trusts, SLATs, ILITs) is warranted.

When to Update Your Estate Plan

Review your estate plan every 3 to 5 years, and immediately after:

Marriage or divorce: Update beneficiaries, reconsider your agent choices, and in the case of divorce, remove your ex-spouse from all fiduciary roles and beneficiary designations immediately — do not wait. Some states automatically revoke an ex-spouse's status upon divorce, but others don't, and the safest approach is to update everything yourself.
Birth or adoption of a child: Name a guardian and update your will and trust to provide for the child, potentially through a testamentary trust that holds assets until the child reaches a responsible age.
Death of a beneficiary, executor, or agent: Every role needs a backup, and if someone dies, you need to name a replacement.
Move to a new state: Laws governing wills, trusts, powers of attorney, and probate vary significantly by state. A will validly executed in one state is generally valid in another, but the terms may be interpreted differently. Trusts may need different language to comply with state law.
Significant change in assets or debts: If your net worth doubles or you take on substantial debt, your plan should reflect the new reality.

What This Costs and How to Pay For It

Estate planning is cheaper than most people assume and vastly cheaper than the cost of not doing it. For a straightforward situation — single or married without unusual circumstances — expect to pay:

Will + POA + healthcare documents (attorney): $800 - $2,500
Full trust package with will and ancillary documents (attorney): $2,500 - $7,000
Online services (will and basic documents): $100 - $500
Online services (trust package): $400 - $1,400

Many employers offer legal insurance plans (like MetLife Legal or LegalShield) as a voluntary benefit for $15 to $25 per month, which typically covers basic estate planning documents with a network attorney. If your employer offers this, take it for a year, get your documents done, and cancel — it's the cheapest way to get attorney-drafted documents.

Where to Store Your Documents

Your executor and agents must be able to find your original documents when they're needed. Store originals in a fireproof safe at home that someone else knows how to access, or in a safe deposit box if a trusted person is a joint owner. Digital copies should be accessible to your agents — not locked behind a password they don't know. Tell your executor, your financial agent, and your healthcare agent exactly where the originals are and how to get them. Having the perfect estate plan is meaningless if no one can find it when you die.

The hardest part of estate planning is starting the conversation — with yourself, with your spouse, and with the people you're asking to serve as agents and guardians. But once the documents are signed and stored, the peace of mind is real. You've answered the hard questions so your family doesn't have to guess. And you've proven that you don't need to be rich to care enough to plan.