Estate Planning 101: What is Estate Planning?
Learn everything you need to know about estate planning including what it is, getting started & the basics of estate planning in this guide.
Protect Your Future & Loved Ones
Estate planning isn’t just about money—it’s about ensuring your final wishes are honored, your family is protected, and your health decisions remain in trusted hands. Learn the essential documents, tax-saving strategies, and 12 simple steps to build your estate plan today.
Estate Planning Made Simple
Creating an estate plan can feel overwhelming, but securing your family’s future doesn’t have to be complicated. Whether you are designating guardianship, protecting your assets, or avoiding unnecessary taxes, this guide breaks down everything you need to know step-by-step.
Estate Planning 101: Master the Basics & Take Control
From Wills and Trusts to Healthcare Directives, discover how easy it is to create an affordable, legally sound estate plan that protects what matters most.
What is Estate Planning?
Estate Planning is simply the process of making it clearly known how you want your estate to be handled after you pass or if you’re incapacitated and unable to handle things on your own. The most common Estate Planning definition is — “the process of making plans for the management and transfer of your estate after your death, using a Will, Trust, insurance policies and/or other devices.” Estate Planning has been around for many years, but it’s becoming increasingly more and more common.
There are many parts of Estate Planning, but the first thing you must do is conduct a comprehensive review of your estate assets. Your estate is made up of all the property you own, including:
- Cash
- Cars
- Clothes
- Jewelry
- Houses
- Investments
- Savings
- Retirement accounts
- Land
- And more
After you have a clear idea of what your estate is made up of, you can then begin planning.
Basics of Estate Planning
Estate Planning is important for many reasons. Perhaps the biggest benefit is if you don’t properly prepare for what should happen in the future while you’re sound and capable, you’ll have no say in how your estate is handled or what your loved ones receive when that time comes. Planning today ensures your tomorrow is exactly as you envision it.
A properly prepared Estate Plan will lay out your wishes exactly, in the most tax-advantage manner, so you can trust there won’t be any questions, misunderstandings or misconceptions about what you want.
Estate Planning & Taxes
Much of your Estate Planning is done with taxes in mind. The ultimate goal is to leave the absolute most you can to your heirs. Strategizing by taking action to minimize assets lost to taxes is an effective way to achieve your goal. There are some tools you can use within your Estate Plan, including ways to avoid probate and pass assets while avoiding hefty taxes. Understanding potential types of taxes is important.
- Estate tax: A tax imposed on estates worth more than a set value. The tax is only assessed on the amount that exceeds the maximum, not the entire value of the estate. In 2023 that amount is over $12M.
- Inheritance Tax: A tax paid by someone who inherits either property or money from someone who has died. Arizona doesn’t have this tax.
- Gift tax: A tax that’s applied on gifts exceeding a certain dollar amount. Note the giver, not the receiver, is responsible for any tax.
Who Needs an Estate Plan?
Short answer: Everyone. It’s easy to try and convince ourselves that we don’t need an Estate Plan. But the reality is, we would all be better off if we were planning a little more for our future. You don’t need to be wealthy, or elderly or even have a specific amount in your bank account to justify the need for a valid estate plan. If you are over the age of 18, and someone may suffer economically from your death, you should start thinking about creating a plan.
Even if you don’t have a lot of assets, your Estate Plan is a guarantee that everyone will know what your wishes are. Health directives and long-term healthcare wishes are perfect examples of this – if you were ever to become incapacitated and couldn’t make your wishes known, your Estate Plan will speak for you, so your loved ones don’t have to make unthinkable decisions or wonder what you would want.
It used to be that properly preparing the types of documents that go in an Estate Plan could cost you thousands. But now you have options. You can get an affordable, legal, effective, valid Estate Plan that ensures your wishes will be known should the time ever come it’s needed. Even if you don’t have a lot of assets, an Estate Plan is still a wise idea.
How to Create an Estate Plan in 12 Steps
Yes, there are a lot of steps that go into creating a complete Estate Plan, but we’ve made it as easy as possible for you by listing each out.
- Gather your assets. Inventory everything you own, from cars to collectibles.
- Protect your family. Think about if you have adequate life insurance to leave your family in a position where they could maintain the life you currently lead.
- Decide on the Plan that is right for you. In consultation with your attorney, decide what type of Estate Plan you need.
- Consider who you would want to serve as Guardian. If you have children or pets, or if you care for another loved one who cannot care for themselves, you want to choose a guardian. You can also name the person you would want to make medical and/or financial decisions on your behalf should you ever become unable to do so for yourself.
- Decide on your supplemental documents. There are several directives you should include in your Estate Plan, including but not limited to:
- Durable Power of Attorney
- Medical care directive
- Limited Power of Attorney – LPOAs are less commonly used (Durable POAs are more frequently the norm), though an LPOA can be appropriate in some instances.
- Think about potential Beneficiaries. Some documents and accounts will have Beneficiaries already designated. These could include retirement plans and life insurance policies, to name a few. But there are other assets you should note in your Will or Trust if you’d like to leave them to a specific person. If there is an opportunity, you should name contingent Beneficiaries. Keep in mind that Beneficiary designations will only go into effect after you pass, so if you become incapacitated and unable to make decisions, you need to have prepared for more than simply naming Beneficiaries.
- Find a trusted Advisor. Retaining an experienced estate planning firm like the Holt Law Offices could be the perfect solution to starting on the path of Estate Planning.
- Finally, create the plan. Sit down with your attorney and decide on the best path to follow, go through all the steps and finalize everything.
- Sign your documents in the presence of a Notary Public. Don’t forget to check how many witnesses your state requires, in Arizona we need two for the will. The Holt Law Offices will provide a notary when signings are done in our office.
- Notify your successor Trustee and the agents on your powers of attorney. It’s a good idea to let the person you chose to help you know of your intentions.
- Safely store your estate planning documents. Put your Estate Plan in a safe place where your loved ones can easily find it. A fireproof safe is a good idea. The Holt Law Offices does maintain an electronic copy of your signed and notarized documents.
- Update as needed over time. There isn’t a hard rule about when you should update your Estate Plan, but a good rule of thumb is try to update it whenever you have a major life event (birth of a child, death of someone important to your plan, marriage, divorce, etc.). And if you find you haven’t had any life events in recent years, try to review and update as needed every 3 – 5 years.
