Estate Planning Basics: Understanding the Fundamentals of Estate Planning

The Basics of Estate Planning

/ 04:47 PM July 17, 2023

Estate planning—these two words might seem daunting, but they represent a powerful tool in your financial arsenal. Estate planning enables you to determine how your assets, property, and healthcare decisions will be handled after your passing, giving you control over these matters even when you’re no longer around.

Image depicting a person reviewing legal documents related to estate planning.

It’s more than just distributing your belongings—it’s about creating a legacy that reflects your wishes and safeguards your loved ones. In this article, we examine estate planning, breaking down its basics and guiding you through essential concepts and considerations. Whether you’re just starting out or reevaluating your existing plans, our insights will empower you to navigate this process effectively.

Table of Contents

1. What is an Estate Plan

2. Why Estate Planning Matters

3. Understanding the Estate

4. How do you Create an Estate Plan

5. Key Components of Estate Planning

– Wills

– Trusts

– Beneficiary Designations

– Power of Attorney

– Healthcare Directive

– Guardianship Designations

6. Working with Professionals

– Estate Planning Attorney

– Financial Advisor

– Tax Consultant

– Insurance Agent

7. Factors to Consider in Estate Planning

– Family and Dependents

– Charitable Giving

– Business Succession

– Asset Protection

8. Estate Taxes

– Understanding Estate Tax

– Federal Estate Tax Exemptions

– State Estate Taxes

9. Updating Your Estate Plan

10. Communicating Your Plan

11. Common Misconceptions

– Estate Planning is Only for the Wealthy

– Estate Planning is Only for the Elderly

– Once You Create an Estate Plan, You’re Done

12. Conclusion

What Is an Estate Plan?

An estate plan is a comprehensive legal framework that outlines how an individual’s assets will be managed, preserved, and distributed upon their incapacitation or death.

It involves several essential components, including wills, trusts, powers of attorney, and healthcare directives. Estate planning lawyers play a crucial role in assisting individuals in creating personalized and legally sound estate plans that align with their wishes.

If you’re near St. Louis, Missouri, and looking for estate planning services, visit The Law Office of David S. Schleiffarth, LLC. These legal professionals can help guide you through this process smoothly and ensure an equitable outcome for your heirs.

Why Estate Planning Matters

Estate planning matters for several reasons. Firstly, it provides you with the opportunity to dictate how your assets will be distributed, ensuring that your wishes are carried out after your passing.

Without a proper estate plan, a court of law can distribute your assets according to state laws, which might not align with your desires. Additionally, estate planning allows you to minimize potential conflicts among your family members. In effect, you reduce the burden on your loved ones during an already challenging time.

Understanding the Estate

Before going further into the basics of estate planning, understanding the concept of an estate is our first step in this journey. In this context, an estate encompasses all your possessions, including real estate, bank accounts, investments, insurance policies, personal belongings, and even digital assets.

A clear understanding of your estate’s composition can help you develop a more effective estate plan that addresses all your assets and their specific requirements. Get Professional Estate Planning assistance in Missouri.

How Do You Create an Estate Plan?

Ready to take control of your legacy with estate planning? We’ll guide you through six essential steps, from assessing your estate and identifying beneficiaries, to understanding tax implications and the importance of regular updates. Let’s get started!

  1. Assessing your estate: To begin the estate planning process, you must evaluate your estate comprehensively. Estate assessment taking account of your assets, such as property, investments and personal belongings, to determine their value and significance.
  2. Identifying beneficiaries: Selecting beneficiaries and potential heirs is a crucial step in estate planning. Clearly defining who inherits your assets ensures your executors or a court of law carries out your wishes accurately.
  3. Choosing an executor/trustee: An executor or trustee is responsible for managing and distributing your estate according to your wishes. Remember to choose a trustworthy individual who can handle this important role.
  4. Determining distribution: Estate planning provides you with the opportunity to specify how your assets should be distributed among your beneficiaries. Consider their needs, circumstances, and your own preferences while making these decisions.
  5. Addressing tax implications: One of the significant benefits of estate planning is the ability to minimize tax liabilities. Consult with professionals to explore strategies that can help reduce estate taxes and maximize the value of your estate.
  6. Regular reviews and updates: Estate planning is not a one-time event. Life circumstances change, tax laws evolve, and your assets may fluctuate. Remember to review and update your estate plan periodically to ensure it remains current and aligned with your goals.

Common Estate Planning Documents

Estate planning involves several key components that work together to create a comprehensive plan tailored to your needs. Let’s explore these components in detail:


A will is a legal document that outlines your wishes regarding the distribution of your assets after your death. It also outlines the following:

  • Names beneficiaries who will inherit your property
  • Designates an executor responsible for carrying out your wishes
  • Guardianship provisions for minor children.

Creating a will is essential for ensuring that your assets are distributed according to your preferences.


A trust is a legal entity that holds assets for the benefit of specific individuals or organizations. It allows you to transfer your assets to the trust, which a trustee manages according to your instructions.

Trusts offer benefits such as

  • avoiding probate,
  • maintaining privacy, and
  • controlling the distribution of assets over time.

There are different types of trusts, including revocable living trusts and irrevocable trusts, each serving different purposes.

Beneficiary Designations

Beneficiary designations are instructions you provide to financial institutions and insurance companies, specifying who will receive certain assets upon your death. These designations are commonly used for retirement accounts, life insurance policies, and payable-on-death bank accounts. Reviewing and updating your beneficiary designations regularly are crucial to ensure they align with your estate plan.

Power of Attorney

A power of attorney is a legal document that grants someone the authority to act on your behalf in financial and legal matters if you become incapacitated. This person, known as the agent or attorney-in-fact, can make decisions related to banking, investments, taxes, and property management. Choosing a trustworthy individual as your power of attorney ensures someone handles your affairs according to your wishes.

Healthcare Directives

Healthcare directives, such as a living will and a healthcare power of attorney, allow you to express your healthcare preferences. This way, you designate someone to make medical decisions on your behalf if you are unable to do so. These documents provide guidance to healthcare professionals and ensure that your medical treatment aligns with your values and beliefs.

Guardianship Designations

If you have minor children, designating a guardian who will take care of them is something you should also prioritize in the event of your passing. Guardianship provisions in your estate plan ensure your children are under the care of someone you trust and who shares your values and parenting style.

Working with Professionals

Creating a robust estate plan often requires the assistance of professionals who specialize in various aspects of financial and legal matters. Consider working with the following professionals to ensure that your estate plan is comprehensive and tailored to your specific needs:

Estate Planning Attorney

An estate planning attorney specializes in the legal aspects of estate planning. They can help you navigate complex laws, draft legally sound documents such as wills and trusts, and ensure your estate plan aligns with your goals and objectives.

Financial Advisor

A financial advisor can provide guidance on investment strategies, retirement planning, and wealth preservation. They can help you analyze your financial situation, identify potential gaps in your estate plan, and recommend appropriate solutions.

Tax Consultant

Tax considerations play a significant role in estate planning. A tax consultant or accountant can help you understand the tax implications of various estate planning strategies and assist in minimizing estate and inheritance taxes.

Insurance Agent

An insurance agent can review your insurance policies, such as life insurance, and ensure they align with your estate planning goals. They can help you determine the necessary coverage to protect your loved ones and facilitate the smooth transfer of assets.

Factors to Consider in Estate Planning

When creating an estate plan, consider the following four factors to ensure its effectiveness and alignment with your goals:

1. Family and Dependents

Consider the needs of your family and dependents when developing your estate plan. This includes identifying beneficiaries, providing for minor children, and considering the financial support required for your loved ones’ well-being.

2. Charity

If philanthropy is important to you, incorporate charitable giving into your estate plan. This can involve setting up a charitable trust, making bequests to charitable organizations, or establishing a foundation to support causes close to your heart.

3. Business Succession

If you own a business, planning for its succession is essential in your estate plan. Determine who will take over the business or how it will be sold or transferred to ensure its continued success.

4. Asset Protection

Asset protection is an essential consideration in estate planning. Explore strategies to protect your assets from potential creditors, lawsuits, or other threats. In these cases, you can establish trusts or utilize certain legal structures to protect your assets.

Estate Taxes

Understanding estate taxes is important in estate planning, as it can significantly impact the distribution of your assets. Here are some key points to consider:

Understanding Estate Tax

Estate tax, also known as the “death tax,” is a tax imposed on the transfer of assets upon an individual’s death. It is based on the total value of the estate and can be levied at the federal and state levels. Estate tax rates and exemptions vary depending on the jurisdiction.

Federal Estate Tax Exemptions

The federal government provides an estate tax exemption, which is the amount up to which an estate is not subject to federal estate tax. This exemption amount is adjusted annually for inflation. It’s important to stay informed about the current exemption limits to assess the potential impact on your estate.

State Estate Taxes

In addition to federal estate taxes, some states impose their own estate or inheritance taxes. These taxes may have different exemption thresholds and rates than the federal government. Be sure to understand the estate tax laws specific to your state of residence.

Updating Your Estate Plan

Estate planning is not a one-time event. It requires periodic reviews and updates to reflect changes in your life circumstances, financial situation, and laws.

Life events such as marriage, divorce, the birth of a child, or the acquisition of significant assets should prompt a reassessment of your estate plan. Regularly reviewing and updating your plan ensures that it remains current and aligned with your intentions.

Communicating Your Plan

Equally important to creating an estate plan is communicating your intentions to your loved ones. Sharing the details of your estate plan with your family members and key individuals in your documents can help prevent future misunderstandings, conflicts, and disputes. Open and honest communication ensures everyone understands your wishes and can carry them out accordingly.

Common Misconceptions

There are several common misconceptions surrounding estate planning. Let’s address a few of them:

Estate Planning Is Only for the Wealthy

Estate planning is not exclusive to the wealthy. Regardless of the size of your estate, having a plan in place allows you to protect your assets, provide for your loved ones, and ensure your wishes are respected.

Estate Planning Is Only for the Elderly

When people think of estate planning, they often think of older individuals. However, it is essential for adults of all ages. Tragedy can strike at any time, making it important to have a plan in place to protect yourself and your loved ones.

Once You Create an Estate Plan, You’re Done

Estate planning is an ongoing process. Life changes, tax laws evolve, and your financial situation fluctuates. Regularly reviewing and updating your estate plan ensures its effectiveness and relevance over time.


Understanding estate planning basics is crucial for everyone. Creating a comprehensive estate plan can help you protect your assets, provide for your loved ones, and ensure that your wishes are respected.

Seeking professional assistance from estate planning lawyers, financial advisors, and tax consultants can help you navigate the complexities of estate planning and tailor your plan to your specific needs.

Most importantly, remember to regularly review and update your estate plan to account for any changes in your life circumstances or laws. By taking these steps, you can have peace of mind knowing that your assets will be distributed according to your wishes and that your loved ones will be taken care of.

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