On May 31, 2023 in Estate Planning by Leighton Tyau

The Basics of Estate Planning

The basics of estate planning


Estate planning is a complex process that involves multiple legal terms and concepts. Without a solid understanding of these terms, estate planning can be a difficult process. In this article, we will discuss some of the key terminology involved in estate planning, including wills, trusts, beneficiaries, personal representatives, probate, non-probate assets, power of attorney, and living wills. By understanding these key terms, you’ll be better equipped to navigate the estate planning process and make informed decisions about your assets and beneficiaries. We will also discuss the importance of creating a will and utilizing trusts as part of the estate planning process.

Understanding the Terminology

Estate planning is a complex process that involves multiple legal terms and concepts. Before delving into the basics of estate planning, it’s important to have a solid understanding of the key terminology involved. Here are some of the most important terms you need to know:

Will: A will is a legal document that states how you, the testator, want your assets to be distributed after you pass. It can also nominate guardians for minor children and specify funeral arrangements. Wills go through probate, which is a legal process that proves the will to be valid and allows the personal representative to distribute the assets according to the will and the laws of the state.

Trust: A trust is a legal arrangement where a trustee holds and manages assets on behalf of the beneficiaries named in the trust document. There are many different types of trusts, including revocable trusts, irrevocable trusts, living trusts, and testamentary trusts. Revocable trusts are commonly used to avoid probate. Irrevocable trusts, such as testamentary trusts, can provide for special needs beneficiaries and protect assets from creditors and divorce.

Beneficiaries: A beneficiary is a person or entity who receives assets from a will, trust, or the estate through intestacy. Beneficiaries can be individuals, entities, or even pets.

Personal Representative/Executors: A personal representative is the modern term for an executor. The personal representative is responsible for managing the probate process and distributing the assets fairly and correctly. Personal representatives are responsible for paying off any debts and taxes owed by the decedent, and distributing the remaining assets to the beneficiaries.

Probate: Probate is a legal process that occurs after someone passes away. During probate, a court validates the will or determines intestacy, issues letters of personal representative, and oversees the distribution of assets. Informal probate is a relatively simple process, but formal probate can be expensive and lengthy.

Non-Probate Assets: Non-probate assets are assets that bypass the probate court. These are assets which were previously owned by the decedent, but pass to a beneficiary by operation of law without the need of the probate court to issue letters or orders.

Power of Attorney: A power of attorney comes in two forms, a financial power of attorney and a healthcare power of attorney. Both of these documents allow for a trusted person or entity to make decisions on your behalf. Any good estate plan will also include these documents.

Living Will: A living will writes down and communicates to your healthcare agent your wishes concerning end of life treatment and other medical desires. It helps your loved ones and trusted persons understand what you would like to have happen to you in case you are unable to communicate your healthcare desires yourself.

By understanding these key terms, you’ll be better equipped to navigate the estate planning process and make informed decisions about your assets and beneficiaries. It’s important to work with an experienced estate planning attorney to ensure that your wishes are properly documented and your assets are protected.

Creating a Will

A will forms the keystone of any estate plan. Without a will, your estate will go through the default plan imposed upon you by the state, called intestacy. By executing a will, you ensure that your wishes will be followed instead of the default distribution plan. This can help minimize or eliminate disputes among family members, streamline the estate administration process, and ensure minor children don’t need a conservatorship.

There are several key elements to any will: satisfaction of any legal formalities, naming of beneficiaries, determination of the takers of last resort, and appointment of a personal representative. Your will may also contain optional elements such as nomination of guardians, creation of a testamentary trust, or many other bequests.

The best way to create a will is to work with an experienced attorney who will walk you through the formalities and make sure your documents accurately express your desires and avoid any unintended consequences and pitfalls. A less expensive choice is to work with a document preparer. An even less expensive option is to use an online service such as Legal Zoom; however I do not recommend it as the costs of a poorly thought out plan far outweigh the savings. (If you still desire to go this route, at least use a free service because at least you’ll receive your moneys’ worth). Finally, you can create what’s called a holographic will in most states.

Utilizing Trusts

Trusts are a very useful tool in the estate planner’s tool chest. It can provide flexibility and accomplish things simpler structures cannot. A trust is a fiduciary relationship where a trusted person holds legal title to property for the benefit of a beneficiary. As an estate planning tool, they can be used for tax minimization purposes and as a will substitute in order to avoid formal probate or make it easier for your heirs to quickly administer your estate. Two additional features are privacy from the general public and a possibility for an easier transition to your trusted person in case of incapacity.

There are several types of trusts, each with their own unique characteristics and uses. While this list is not exhaustive, these are some of the most commonly used names for types of trusts.

  • A revocable trust. Also called living trusts by laypeople (it’s a misnomer as a living trust is any trust created while alive), revocable trusts can be amended or revoked by the grantor (the person creating the trust) at any time or for any reason. The primary advantage is to avoid probate. They may also speed up the transfer of management of assets in the event of incapacity. And they are kept secret from the general public.
  • Irrevocable trusts. As the name implies, irrevocable trusts cannot be changed or revoked once they are created. They provide tax benefits, protect assets from creditors, or provide for the supplemental needs of special needs beneficiaries while allowing them to continue to receive government benefits.
  • Testamentary trusts. Testamentary trusts are created via a will upon the grantor’s death. They are irrevocable by nature and provide many of the same benefits.
  • Special needs trusts. Special needs trusts are designed to provide for the supplemental needs of beneficiaries utilizing government benefits such as Medicaid or SSI, without disqualifying them from the same benefits.

While you don’t have to, we highly recommend working with an experienced estate planning attorney; trust litigation is extremely expensive and a lot can go wrong if you make the wrong choices. Under no circumstances should you ever try to craft your own irrevocable trust. The attorney will sit down and determine whether a trust even makes sense given your circumstances, and if it does, proceed to craft a document which won’t result in accidental disinheritances, extra taxes, or family strife.

Once the trust is created, you will need to transfer assets into the trust in order for it to be effective. A good attorney will work with you after the trust is executed in order to transfer the necessary assets and correct beneficiary designations drafted. Make sure you ask prospective attorneys if this is included in the fee agreement.

Naming Beneficiaries

Most of your assets should pass via your estate planning vehicle (will or trust). Others require named beneficiary designations else there will be consequences. Retirement accounts and life insurance are the two most common assets which impose penalties for failing to name beneficiaries.

Properly naming beneficiaries via short or long form beneficiary forms can ensure that your assets are distributed according to your wishes. To properly name beneficiaries, it’s important to understand the rules and requirements for each type of asset and to review and update your beneficiary designations with each major life event or tax law change. 

Common mistakes to avoid when naming beneficiaries include failing to name a contingent beneficiary, naming minor children, and failing to update beneficiary designations after major life changes such as marriage, divorce, or the birth of a child. Working with a knowledgeable estate planning attorney able to draft long form beneficiary designations will ensure that your beneficiary designations are properly structured to meet your estate planning goals.

Appointing an Executor or Personal Representative

Nominating your personal representative is a critical part of estate planning. A personal representative is a fiduciary responsible for carrying out the terms of your will and overseeing the distribution of your probate assets after your death. They will adjudicate and pay off debts and administration expenses, file tax returns, distribute specific bequests, and distribute the remaining property to your beneficiaries. 

Selecting the right personal representative is critical, as they will be responsible for managing complex financial and legal matters during a difficult and emotional time. It’s important to choose someone who is trustworthy, competent (capable of managing the responsibilities of this role), and available when the time comes. This may be a beneficiary or it may be a professional such as an attorney or licensed professional fiduciary.

When choosing a personal representative, consider their availability and willingness to serve in the role, their ability to make hard decisions, and their willingness and ability to hire professionals when appropriate. It’s also important to make sure they are willing and able to serve in this role. By taking the time to carefully select a personal representative, you can help ensure that your estate is managed in a responsible and efficient manner, and that your wishes are carried out effectively.

Estate Taxes

Estate taxes are taxes that are assessed on the value of an individual’s estate at the time of their death. The tax is based on the fair market value of all the assets you own, including real estate, investments, life insurance, and personal property. The federal estate tax currently applies to estates valued at over $12.06 million (as of 2022), although some states may have lower thresholds for state estate taxes.

There are several strategies that can be used to minimize estate taxes. One common strategy is to make gifts which fall under the annual exclusion to beneficiaries during your lifetime. Pay taxes on any deferred income (convert to Roth). Or make gifts while you’re alive.

It’s important to consult with an attorney familiar with the estate tax to determine the best strategies for minimizing estate taxes based on your individual circumstances. By taking proactive steps to minimize estate taxes, you can help ensure that your beneficiaries receive the maximum benefit from your estate.

Updating Your Estate Plan

Updating your estate plan is an important step in ensuring that your wishes are accurately reflected and that your estate is managed according to your wishes. As circumstances in your life change, it’s important to periodically review and update your estate plan to reflect these changes.

It’s generally recommended that you review your estate plan at least every three to five years, or whenever there is a significant change in your life circumstances. Changes such as getting married or divorced, having children or grandchildren, purchasing or selling property, or changes in your financial situation.

To update your estate plan, start by reviewing any major life changes that have occurred since signing the documents. Make note of these changes and decide whether any changes need to be made to your beneficiary choices. It is also important to redetermine whether your trusted people are still willing and able to complete the task you’ve asked of them. It’s also important to review and update any powers of attorney or healthcare directives to ensure that your wishes are accurately reflected.

Once you have identified the changes that need to be made, consult with your attorney to update your documents and re execute the new ones. By regularly updating your estate plan, you can help ensure that your wishes are accurately reflected and that your estate is managed according to your wishes.


In conclusion, estate planning is a vital process to ensure that your assets are managed according to your wishes and that your loved ones are taken care of after your passing. By familiarizing yourself with the basic terminology and elements of estate planning, you can take proactive steps to create a plan that meets your needs and reflects your wishes, while avoiding unintended consequences. Whether it’s creating a will, a trust, naming beneficiaries, minimizing estate taxes, or updating your estate plan, it’s essential to collaborate with an experienced attorney to ensure that your plan is legally sound and accurately reflects your wishes. At Copper State Planning, we are here to help you through every step of the estate planning process. By taking the time to create and update your estate plan, you can provide peace of mind for yourself and your loved ones, and help ensure that your legacy is protected for future generations. Reach out to us for expert guidance and assistance in crafting the estate plan that best suits your needs.

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