Estate Planning Basics

The core documents

Will. Directs where your assets go and who manages the process (your executor). Appoints guardians for minor children. Without a will, state intestacy laws decide — usually not what you'd have chosen.

Revocable living trust (optional but common). A trust you create during life, name yourself trustee, and fund with your assets. At death, a successor trustee distributes assets without going through probate.

Healthcare directive / living will. Specifies what medical interventions you want (or don't want) if you're incapacitated. Common directives address life support, feeding tubes, resuscitation.

Healthcare power of attorney (healthcare proxy). Names someone to make medical decisions for you if you can't.

Durable financial power of attorney. Names someone to manage your finances if you become incapacitated. Can be immediate or "springing" (activated only on incapacity).

Beneficiary designations. Separate from your will. Applied to retirement accounts, life insurance, and transfer-on-death accounts.

The baseline cost for these documents from an estate planning attorney is $1,000–$3,000 for a simple plan. Complex estates with trusts, business interests, or special-needs planning run higher.

What a will does — and doesn't

A will:

• Distributes "probate assets" per your instructions.
• Names an executor.
• Names guardians for minor children.
• Can include tax provisions (bypass trusts, etc.).

A will does NOT control:

• Assets with beneficiary designations (retirement accounts, life insurance, transfer-on-death accounts). These pass directly to named beneficiaries regardless of your will.
• Assets held jointly with right of survivorship. These pass automatically to the surviving joint owner.
• Assets in a revocable living trust. These pass per the trust terms.

For most modern estates, a large fraction of wealth passes outside the will via beneficiary designations. Keeping those designations current is as important as keeping the will current.

Probate

Probate is the court process that validates a will and oversees asset distribution. It has several downsides:

• Public. Wills and probate records are public documents.
• Slow. Probate typically takes 6–18 months; complex estates take years.
• Costly. Court costs and attorney fees can consume 3–7% of the probate estate.
• State-specific. Each state has its own probate rules.

Avoiding probate is a common estate planning goal. Mechanisms:

• Beneficiary designations on retirement and life insurance (already outside probate).
• Transfer-on-death (TOD) designations on brokerage accounts and some real estate.
• Joint ownership with right of survivorship for real estate and bank accounts.
• Revocable living trust with assets titled in the trust's name.

For most people, beneficiary designations and TOD accounts cover most assets. A revocable trust is worth considering if you have real estate in multiple states or want enhanced privacy.

Guardians for minor children

If you have children under 18, the single most important estate planning decision is naming a guardian. Without clear designation, the court decides — which may result in custody outcomes you'd have strongly preferred against.

Considerations:

• Choose primary and backup guardians.
• Discuss with the intended guardians before naming them — don't surprise them.
• Consider values alignment, age and health, geographic proximity to extended family, and financial capacity (though you can fund a trust separately).

Many parents choose different people for financial management (trustee) vs physical custody (guardian). A responsible sibling as trustee and grandparents as guardians is a common structure.

Incapacity planning

Death is certain but incapacity is more likely to come first. Dementia, stroke, severe accident — all can leave you alive but unable to manage affairs.

A durable financial POA lets a trusted person pay bills, manage investments, and handle government matters. Without one, your family may need to obtain court-appointed conservatorship — expensive, time-consuming, and with ongoing court oversight.

A healthcare POA lets someone make medical decisions aligned with your values. Without one, state law default hierarchies apply, which may not match your preferences (e.g., prioritizing legal spouses over closer family members in some states).

Beneficiary audit

At minimum once every 3–5 years, review:

• Retirement accounts (401(k), IRA, Roth IRA): primary and contingent beneficiaries current? Spouse is usually default on 401(k)s by law.
• Life insurance: primary and contingent current?
• Transfer-on-death brokerage: current?
• Old employer 401(k)s: any orphaned accounts? Often forgotten.

After any major life event (marriage, divorce, birth, death), update all relevant designations immediately.

The no-estate-plan default

Without a will, state intestacy laws distribute assets. Default distributions vary by state but typically:

• Spouse + children: some combination to each, varying by state.
• No spouse: children equally, then parents, then siblings.
• No one: escheat to the state.

State default may give assets to people you wouldn't choose, especially for unmarried partners (who typically get nothing unintestacy) or blended families.

How Horizons uses this

Horizons helps you model the financial side of estate planning: projected estate value at death, estimated estate tax, beneficiary distributions, and the impact of gifting during life. The software doesn't replace legal documents — you still need an attorney for the actual wills, trusts, and POAs — but it lets you understand the financial shape of what those documents will distribute.

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