Estate Planning Is Not Just for the Wealthy

The most common misconception about estate planning is that it's something you think about when you're old and wealthy. In reality, anyone who has assets, dependents, or strong preferences about what happens to them if they become incapacitated or die needs a basic estate plan — and the right time to create one is before you need it. Here are the fundamentals every adult should understand.

The Core Documents: What Every Estate Plan Needs

A complete basic estate plan typically includes four documents:

  • Will (Last Will and Testament): Directs how your assets are distributed at death, names an executor to manage the process, and — critically for parents of minor children — names a guardian for your children. Dying without a will (intestate) means state law determines who gets your assets, which may not align with your wishes.
  • Durable Power of Attorney: Authorizes someone you trust to manage your financial affairs if you become incapacitated. Without this, family members may need to petition a court for guardianship to manage your finances.
  • Healthcare Directive (Living Will) and Medical Power of Attorney: Documents your wishes for medical treatment if you cannot speak for yourself, and names someone to make healthcare decisions on your behalf.
  • Beneficiary Designations: For retirement accounts, life insurance, and some bank accounts, the beneficiary designation supersedes your will. These must be reviewed and kept current.

When Trusts Make Sense

A will-based estate plan works well for many people. But trusts — particularly revocable living trusts — offer advantages in certain situations. Assets held in a trust avoid probate, which can be a lengthy and expensive court process in some states. Trusts also allow more detailed control over how and when assets are distributed — particularly important for beneficiaries who are minors, have special needs, or may not be ready to manage a lump sum inheritance responsibly.

Common misconception: Creating a trust doesn't reduce estate taxes for most people. The federal estate tax exemption is over $13 million per person in 2026 — the vast majority of Americans will never owe federal estate taxes regardless of their planning structure.

Retirement Accounts and Beneficiary Designations

Your 401(k), IRA, and life insurance policies pass to beneficiaries outside of your will — which means they're not affected by your estate plan unless your estate is named as beneficiary (which is usually not advisable). Review beneficiary designations every few years and after any major life event: marriage, divorce, birth of a child, or death of a named beneficiary. Outdated designations are one of the most common estate planning mistakes.

Business Owners: Don't Neglect Business Succession Planning

If you own a business, your estate plan should include a business succession plan — a documented roadmap for what happens to your business if you die, become incapacitated, or decide to retire or sell. Without a plan, a business built over decades can be disrupted or destroyed by an unplanned ownership transition. Summit Advisory works with business owners to integrate succession planning into a comprehensive financial and estate strategy.

When to Start — and When to Review

The right time to create an estate plan is as soon as you have assets, dependents, or specific wishes about your affairs. For most people, this means before 30. Once established, review your plan after major life events: marriage, divorce, birth or adoption of children, significant changes in assets or debts, moves to a different state, and changes in tax law that could affect your situation. Most estate plans benefit from a review every 3-5 years even without major life changes.