Estate Planning Basics: Common Documents and Decisions to Consider

Eric Mischler |
Categories
Financial Planning
Estate Planning

Estate planning is often associated with the transfer of assets after death. However, estate planning may also involve planning for situations in which someone becomes unable to make financial or healthcare decisions, as well as documenting important wishes and appointing trusted individuals to act on their behalf. Common estate planning documents can include wills, trusts, powers of attorney, and advance directives.1

While everyone's circumstances are different, understanding the basic components of an estate plan can help individuals and families become more informed about the planning process. 

Understand the Probate Process

Probate is the legal process through which a deceased person's estate is administered. Depending on the circumstances, probate may involve validating a will, settling debts, and distributing assets to heirs or beneficiaries. Probate procedures vary by state and may differ based on the type and ownership of assets involved.1

Understanding how probate works can be an important consideration when evaluating an overall estate plan.

Create a Will

A will is one of the foundational documents in an estate plan. Generally, a will outlines how an individual's assets should be distributed upon death and may also be used to designate guardians for minor children.1

Without a valid will, state law may determine how certain assets are distributed. While a will does not avoid the probate process, it can provide clear instructions regarding an individual's wishes and help guide the administration of the estate. Because estate planning laws vary by state, individuals should consult a qualified attorney regarding their specific circumstances and legal needs.

Review Beneficiary Designations

Many financial assets transfer according to beneficiary designations rather than directions contained in a will.

Examples may include: 

  • Employer-sponsored retirement plans
  • Individual Retirement Accounts (IRAs)
  • Life insurance policies
  • Certain annuities

Because beneficiary designations often determine who receives these assets, reviewing them periodically may be an important part of maintaining an estate plan. Fidelity notes that estate plan maintenance includes reviewing and updating beneficiary information to help ensure it remains aligned with an individual's wishes and circumstances.2

Major life events such as marriage, divorce, the birth of a child, or the death of a loved one may serve as opportunities to revisit beneficiary designations and other estate planning documents.2

Consider Whether a Trust May Be Appropriate

A trust is a legal entity that can hold property and other assets and is managed by a trustee. Trusts may serve a variety of purposes depending on an individual's goals and circumstances. Unlike wills, trust assets generally do not pass through probate, and trusts may also provide privacy because they are not part of the public probate process.1 

Because trust planning can be complex and laws vary by state, individuals should consult a qualified legal professional regarding whether a trust may be appropriate for their situation.

Consider Having a Power of Attorney

A power of attorney is a legal document that allows an individual to appoint another person to act on their behalf. Powers of attorney may be limited in scope or more general in nature. There are two types of Powers of Attorney (POA) worth exploring…

  • Durable Power of Attorney: A durable power of attorney remains effective if the person creating the document becomes incapacitated.1 A durable power of attorney may be used to help manage financial, legal, or administrative matters if an individual is unable to do so personally. Selecting a trusted person for this role is an important consideration.
  • Healthcare Power of Attorney: A healthcare power of attorney allows an individual to designate someone to make healthcare decisions on their behalf if they become unable to communicate those decisions themselves. This document can help provide direction to healthcare providers and loved ones during difficult situations.1 Many individuals choose to discuss their healthcare wishes with the person they appoint before those decisions are needed.

Organize Important Information

Estate planning involves more than creating legal documents. It can also be helpful to maintain organized records of important information, including:

  • Estate planning documents
  • Insurance policies
  • Financial account information
  • Property records
  • Contact information for trusted professional advisors

Keeping this information organized may make it easier for loved ones and designated decision-makers to locate important documents when needed.

Have the Conversation With Loved Ones

Estate planning documents communicate important wishes, but conversations can provide additional clarity. 

Consider discussing:

  • The location of important documents
  • Individuals named to serve in key roles
  • Healthcare preferences
  • General wishes and priorities
  • Contact information for professional advisors

Having these discussions in advance may help reduce uncertainty and confusion during challenging circumstances.

Review Your Plan Periodically

Estate planning is not necessarily a one-time event. Fidelity encourages individuals to maintain and review their estate plans over time to help ensure documents, beneficiary designations, and planning decisions continue to reflect their wishes and circumstances.2

Events that may warrant a review include:

  • Marriage or remarriage
  • Divorce
  • Birth or adoption of a child
  • Death of a loved one
  • Retirement
  • Moving to a different state
  • Significant changes in financial circumstances

As life changes, estate planning documents and beneficiary designations may also need to be revisited.2

Final Thoughts

Estate planning can encompass a variety of financial, legal, and personal considerations. From wills and trusts to powers of attorney and beneficiary designations, understanding the purpose of these tools can help individuals and families become more informed about the planning process. Periodic reviews and open communication with loved ones may also help ensure important wishes remain documented and understood. 

Sources

  1. AARP, 2025  [URL: https://policybook.aarp.org/policy-book/personal-and-legal-rights/estate-planning-and-probate/estate-planning-documents-and-probate]
  2. Fidelity, 2026  (URL: https://www.fidelity.com/wealth-management/estate-planning/overview]

This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.